Thailand's property market is set to improve this year, led by the office sector, due to more stable politics, government economic stimulus measures, low interest rates, falling fuel prices and the robust financial stability of developers.
Jones Lang LaSalle (Thailand) expects several factors will drive a property rebound in 2015, especially for the office sector.
Suphin Mechuchep, managing director of property consultant Jones Lang LaSalle (Thailand) Limited, said it was optimistic about the 2015 property outlook. With the political situation stabilised, the country's reform roadmap should allow for more clarity in policy, helping improve business sentiment and consumer confidence.
The government's spending and investment on infrastructure projects is expected to affect the country's economy this year, helping raise demand in Bangkok's different property sectors.
She said most major investors and developers remained well-capitalised amid low interest rates, which will benefit all property sectors that rely on lending.
They have shown strong appetite to acquire existing income-generating property assets or suitable land for new development.
Real estate investment trusts introduced last year to replace property funds offer higher flexibility and efficiency and should encourage future growth across different property market sectors, Mrs Suphin said.
"Asean integration is expected to lift demand for Bangkok office space, while infrastructure will be developed nationwide to link the country and neighbours," she said.
Companies looking to expand because of the integration can use service offices to test the market before renting long-term office space, said Mrs Suphin. Mergers and acquisitions or joint ventures in neighbouring countries between Thai and overseas firms fall into this category.
The Bangkok office market saw rents continue to rise last year due to limited new supply and higher demand, gaining 6.75% from 459 baht per square metre per month at the end of 2013 to 490 baht last year.
Net take-up for Bangkok offices in 2014 totalled 181,700 sq m, close to the average take-up rate of 197,700 sq m for the past five years and above the 10-year average of 150,000 sq m. Total office stock last year was 8.28 million sq m, up from 8.16 million sq m in 2013.
The average office vacancy rate also fell from 10% at the end of 2013 to 9.2% last year. Grade A office buildings in the central business area saw more movement, down from 9% to 6.1%, with rents rising 5.6% to 771 baht per sq m per month.
In 2015, 164,782 sq m of new office supply is estimated to be added in Bangkok, including the 47,000-sq-m Bhiraj Tower on Sukhumvit Road, the 40,000-sq-m AIA Sathorn on Sathon Road and the 48,000-sq-m FYI Center on Rama IV Road.
"Bangkok can be a regional operating headquarters, but language skills and communication and internet infrastructure needs to be improved," she said. "We may not be a financial hub like Hong Kong or Singapore, but we can be a services hub."
Mrs Suphin said the retail sector improved since the second half last year, after political turmoil in the first half. Rents rose 2.4% in the second half year-on-year to 2,344 baht per sq m per month.
Prime grade A retail centres continued to have low vacancy rates averaging 3.5%, while vacancies at all grades averaged 7%, down from 8.2% in 2013.
This year total new lettable area of 606,500 sq m is estimated to join the retail sector from 27 projects citywide, up from 400,000 sq m last year. JLL expects another 90,000 sq m in 2016.