Property consultants JLL Thailand warns of property market slowdown

Construction News
People walk past a high-rise condominium project in Pattaya. Pattarapong Chatpattarasill

Property consultants JLL Thailand warns of property market slowdown

Stimulus advised to speed up recovery

All property sectors, except the industrial and logistics market, should brace for a market slowdown of at least 18 months after economic recovery next year, according to property consultant JLL Thailand.

JLL’s chairperson, Suphin Mechuchep, said the office, condo, hotel and retail market in Bangkok is facing a downturn with a decline in rents, prices and occupancies but the market for industrial, logistics and warehouse segments are moving in the opposite direction.

“Rents and occupancies for industrial, logistics and warehouses are seeing an upward trend, driven by strong demand from e-commerce and online business which have experienced growth during the pandemic or since February 2020,” she said.

JLL predicts that the market will start to recover within 18-24 months after the economy begins to recover, which may happen by the second quarter of 2022 at the earliest.

However, if the government imposes stimulus measures for the property market, property demand will be higher.

Suphin Mechuchep

For instance, low-interest mortgage loans or an increase in foreign ownership quota for condos from the current maximum of 49% to no more than 75% or foreign ownership for low-rise houses without voting rights could help.

Mrs Suphin said the number of unsold condos in Bangkok will take 12-18 months to absorb. Since 2018, a total of around 12,700 condo units are on hold.

Of the number, 5,900 units were cancelled, 2,500 units frozen and 4,300 units not launched. This has led to a limited number of newly launched units.

At the same time, the average condo price for all grades dropped to 101,900 baht per square metre this year. Meanwhile, units in prime areas such as the central business district have seen prices decline to 218,000 baht per sq m.

“Right now is an end-buyer’s market, both for self-use and for long-term investment,” she said. “If the current situation [high number of infections] is brought under control, the market will pick up quickly. However, by that time, buyers may miss a good price.”

She said office rents would likely see a decline as nearly 2.3 million sq m of new office spaces, 90% of which is prime grade space, will be added in the market between 2021-26.

In the first quarter of 2021, vacancies of all-grade offices increased by 2% from the same period last year, boosting the vacancy rate to 11.9%, compared with below 10% over the past 10 years.