GOING UP: Thew Talay Estate in Cha-am has three condo projects already completed in the desirable Phetchaburi resort. Photos: BKK Post Archive

All three main sectors of the Bangkok property market -- condominiums, offices and retail -- continued to grow in the first half of 2017 despite the sluggish economy, but growth was not up by much from last year.

New projects continue to be launched in the condominium market, demand for office space from multinational and local companies is also growing, while the occupancy rate in the retail sector stands at 100% in many shopping centres.

The average occupancy rate for office space in the capital is approximately 92%, with new buildings completed in the past two years approaching 100%. Many more buildings are still under construction, suggesting that the market continues to attract attention from both Thai and foreign investors.

The continued rise in land prices is the major factor affecting the expansion of office supply. But many mixed-use projects are also under construction on leased land plots in the Bangkok central business district, and office space is part of most of these projects.

Rental rates have increased in the past few quarters and are continuing to rise, especially in many Grade A buildings where rents are now higher than 1,000 baht per square metre per month.

The retail market also continues to expand, led by larger shopping malls which have shown the highest rate of expansion in terms of area in recent years. Smaller-scale community malls are still being built but at a slower rate compared to previous years. This downturn reflects the fact that many community malls have struggled to maintain the business momentum they experienced during their early years.

The main developers in the retail sector plan to expand existing shopping malls or build new ones and have renovation plans for some old retail centres. In general, Bangkok remains attractive to retailers as more people reach a higher consumption level at which they can afford to patronise both local and international shops for famous brands. As a consequence, more international and local brands are actively looking for opportunities to open outlets in Thailand, either inside or outside large retail centres.

While bricks-and-mortar retail has been hard hit by the surge in online shopping in some countries, Thailand has not been affected significantly yet. Most major Thai retail companies have also developed online platforms to complement their physical stores or malls. Investment in the retail business sector is a long-term proposition, and there are no signs yet of slowing growth in retail supply.

Retail demand is also helped by Thailand's status as a major tourism destination with more than 32 million arrivals last year, while the country attracts many foreign business travellers and has a growing expat workforce as well. This helps explain why many international brands remain very interested in doing business in Thailand.

In the residential sector, meanwhile, concern is mounting among some government and private-sector leaders about a possible condominium oversupply in some locations in Bangkok and a handful of other provinces. Figures for the second quarter of this year showed 13,600 new condominium units launched, an increase of 30% from the first quarter. The second half of the year is expected to be equally busy, resulting in an expected full-year total of 45,000 new units, an increase of 15% from 2016.

Many developers are now focusing more on the Bangkok suburban area, especially along the new Blue and Green mass transit lines now under construction. These projects are expected to appeal to the mid-income market in areas where selling prices have a chance to grow in the future. As well, areas where skytrain lines are under construction are more suitable than the inner-city area where sky-high land prices have made construction of moderately priced condos next to impossible.

The average take-up rate in the second quarter of 2017, meanwhile, was not very high, but some developers were able to sell out new projects.

Meanwhile, the slowdown in the condominium market in provinces with a high tourist presence has carried over from last year. Although some developers have been trying to boost the attractiveness of their projects with major marketing campaigns, in many cases it has taken a year or more after construction completion to sell all units.

The Pattaya condominium market is still in slowdown mode, with new project launches down dramatically compared with the past two or three years, while demand growth has been minimal. Approximately 10,000 unsold condominium units are still waiting to be absorbed by the market, underlining concerns about an oversupply. Although the Chinese have become a significant new buyer group in Pattaya, they alone cannot bring down the glut.

Cha-am and Hua Hin are considered up-and-coming locations in the condominium market, with projects from well-known developers attracting high interest from buyers in recent years. But the building boom of the last five years or so has resulted in a lot of units still looking for buyers.

In Khao Yai, growth has slowed in the condominium market as projects launched in the past two to three years still have units available. However, some projects designed in ways suitable to the geography of Khao Yai have had high take-up rates.

In Chiang Mai, Chinese buyers are starting to make their mark in the condominium market in a big way. Some condominium projects have been coordinating with Chinese agents and have also had high take-up as a result.

In conclusion, the property market in the past year or two has seen slower growth, but there are still no major problems. Although the Bangkok condominium market has a huge supply still available in some locations, new projects are still opening for sale.

All developers are carefully studying market opportunities to ensure that their projects are suitable for existing demand and purchasing power. But some developers have postponed launches planned for this year while they wait for the market to recover. Most observers expect a pickup in economic activity following the royal cremation ceremony in October.

Surachet Kongcheep is associate director for research of Colliers International Thailand. He can be reached at surachet.kongcheep@colliers.com

OVERSUPPLY: Hua Hin remains an attractive location for condo buyers but many units are still looking for buyers after the building boom in recent years. photo: Pattarapong Chatpattarasill

GREEN FOR GO: The Thyme Hill Village residential project is one of the few developments in Khao Yai, Nakhon Ratchasima. The project includes a mix of villas and condominiums.