Worldview: Thailand


Thailand, the world’s 24th largest economy by gross domestic product, had an expectedly turbulent 2021. Facing myriad challenges in the second year of COVID-19, the Southeast Asian nation saw overall GDP contract by 0.9 percent in 3Q2021, before rebounding with an expansion of 1.8 percent in 4Q2021. (Overall, for the year, Thailand’s economy grew by 1.6 percent.) Its primary commercial real estate sectors also experienced an up-and-down 2021.

Both office and retail sectors saw vacancies spike in the first half of the year before ticking downward to levels near those seen in 2020. Industrial assets, meanwhile, experienced a bounce-back year, with vacancies dropping to 10.56 percent in 2H2021 from a COVID-19-fueled high of 14.33 percent in 2H2020. Perhaps the biggest reason for optimism in Thailand’s industrial CRE sector is the continued growth in average selling price, which reached $11.61 per sf, a 7.87 percent year-over-year increase.

Office, meanwhile, faces an uncertain future. The shakeout from the pandemic is expected to take years. Cushman & Wakefield’s economic report on the sector says, “We have observed a rise in enquiries from tenants looking to move from traditional office space to flex space, seeking capex savings, as well as growing leasing enquiries for fully or partially fitted out space. We expect to see overall office asking rents to drop slightly further, with the leasing market continuing to be tenant favorable.”

Retail is also expected to face an extended recovery, due partly to the country’s reliance on international tourism. “Thailand reopened its borders for quarantine-free access to fully vaccinated travelers from 63 countries and territories [in November 2021],” the Cushman & Wakefield report states. “But with tight controls remaining on international tourism, the retail market will need to be supported by higher domestic consumption of retail goods and services.”

Infographic data courtesy of Cushman & Wakefield and Thailand’s Association for Real Estate Affairs.

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