Thailand's property outlook continues to remain very healthy, especially in the residential housing market and the office building sector, according to international property analysts. Real estate analysts gathered at a seminar yesterday said that the Thai property sector continues to show healthy trends and growth would remain positive in the near future.

Asian Property Development's chief executive officer Anupong Assavabhhokhin said there are many factors that are supporting the growth of the residential sector in Thailand. About 33% of the Thai population is aged between 25-44 years, which is a very good demographic for the domestic housing market, especially in the middle-end sector, he said.

Anupong added that when compared with the figures for residential supply, it was only the high-end single detached housing segment that was close to the peak figure from before the 1997 Thailand crisis but in other sectors the level of supply was still low.

He added that the main problem in the Thai property market, which had slowed residential sales was psychological but real demand for residential units is still strong when considered as a demographic. Pre-built concepts are not good for big scale projects, as it brings a halt to the company's overall process if the sales slow down, and this could impact on the entire industry and the psychology of potential buyers in Thailand, he said.

Anupong further added that the increase in oil prices, interest rates and building prices in Thailand had affected developers who should now ensure they had strict financial controls in place.

CB Richard Ellis (Thailand)'s executive director James Pitchon said that for the housing sector, there were many factors affecting its performance of the local property market, such as inflation, land and construction costs, and the level of tax and interest charges which will increase competition in the second half of this year.

In addition, in the case of condominium projects, demand in the Thai market depends on the right project, the right location and each project must have a unique selling point, James Pitchon said.

He added that in the second half of the year, property developers in Thailand will spend more on marketing and advertising to boost sales and market share while launching many new projects. Pitchon said the most important thing for developers was to have consumers gain confidence in their products.

For the serviced apartment sector, the market remains competitive and competition will be strong, hence the supply of serviced apartments will increase by about 1,400 units for the 2004-2005 period, Pitchon further added.

Pitchon said that most developers are planning new projects mainly in the Sukumvit area of Bangkok, where demand is dominated by expatriates. However, the average occupancy rate will remain stable, including the rents in the central business district of Sukumvit while serviced apartment rents in the central Lumpini area will increase due to the limited supply there, Pitchon said.

Pitchon said that in regard to the office market in Bangkok, the situation is positive for developers but negative for tenants because demand continues to grow but supply is still very low, thus rents will tend to further rise.

We further project that about 280,000 sqm of office space will be added in the Business district of Bangkok in the years 2004-2006 while the average vacancy rate will continue to rise in most locations, Pitchon said.

Pitchon said despite the slight increase in retail space in Bangkok, rents remained flat due to the lack of new, good quality units in the market at present. It will be a new centre such as Central World Trade Plaza and Siam Paragon that make some existing retailers renovate and expand in anticipation of increase consumer demand and in order to remain competitive, he said.

The hotel sector also showed a strong performance in the second quarter of this year with an average occupancy rate of about 72% at an average room rate of US$119. This result was in line with the increase in tourist arrivals since the first quarter of 2004 and the growth in the airline sector, which recovered from the SARS impact last year.

There is also strong growth in provinces such as Phuket, Chiang Mai, Krabi and Samui, which has increased competition for new sites and brands such as Ritz Carlton, Pitchon said.