Despite renewed concerns about the state of the global economy and the euro-zone debt crisis, Bangkok residential yields remain firm with gross yield average at 5.9%, says property consulting firm CBRE.

Over the last six quarters,downtown Bangkok condominiums have consistently provided an average yield within a narrow band of 5%to 6%. Smaller one-bedroom units have tended to achieve higher yields in excess of 6%,while larger four-bedroom units are lower at 3%.

However, this trend may change as the majority of new downtown condominium supply to be completed over the next two years will be one-bedroom units, meaning higher competition could lower yields.

With lower purchase prices, units in older condominium buildings mean in-vestors can still achieve comparable yields to new buildings, even with a lower rent.

Investors need to understand tenant requirements before purchasing, in order to maximise the return on their investment.

Sukhumvit and Central Lumpini remain the most popular locations amongst expatriates. Tenants tend to prefer a modern and efficient design and landlords must ensure the interior decoration is neutral enough to appeal to a wide range of tastes.

“Rentals, prices and yields vary considerably in Bangkok even between buildings in similar locations. Performance is determined by the quality and attractiveness of individual buildings, the layout and the decoration individual units,” said James Pitchon,executive director at CBRE Thailand.

• The global economy presented no shortage of economic headwinds and obstacles for commercial real estate in Q2 2011; nevertheless, property sector fundamentals continued to improve. With the relative drought of new construction, tenants continued to face a shortage of preferred space, which either stabilized or placed upward pressure on rents.

• Elevated by strong rental growth in Asia Pacific, the CBRE Global Office Rent Index increased for the fifth consecutive quarter in Q2, reaching 7.4% year over year. Rent growth was positive across all regions, but growth in EMEA moderated, with the index declining slightly to 2.4% year over year. The Americas region, last to emerge from declining rental trends, experienced its first positive quarter of growth, at 1.5% year over year.

This is an extract from CBRE‘s Global Office MarketView Q2 2011.  To read the full document please click here.

OVERVIEW

• Industrial production slows in aftermath of Japan earthquake
Industrial production in Asia Pacific slowed in the second quarter as the March 11 earthquake in Japan disrupted regional supply chains. The negative impact is expected to be short-term, however, with the automotive and electronics sectors in Japan already beginnning to restore production capacity. Strong regional currencies, particularly in Australia, China and Japan, lowered the competitiveness of manufacturers’ produucts in those markets, placing profitability under pressure.

• Rental growth moderates in Asia while Pacific remains stable
The The CB Richard Richard Ellis Asia Pacific Pacific Logistics Rental Index rose by 11.44% q-o-q in the second quarter compared to a 2.2% q-o-q increase in the previous quarter. Almost all markets recordedd lower rental growth except Beijing and Chengdu which remained under tight supply pressure. Rents in most Pacific cities remained stable as landlords offered incentives to retain tenants under the strong currency environment.

This is an extract from CBRE‘s Asia Pacific Industrial MarketView Q2 2011.  To read the full document please click here.

OVERVIEW

• Big drop in transaction volume as investors in Asia tread more carefully
Transaction volume in Asia Pacific totaled US$9.0 billion in the second quarter of 2011, a decline of 39% q-o-q, as investors in Asia turned more cautious following the March 11 earthquake and tsunami in Japan and the worsening economic picture in the United States and Eurozone. Whilst transaction volume in Asia fell by 52% q-o-q, the Pacific markets picked up strongly by 228% q-o-q, albeit coming off a low base after a slow start to the year.

• Australia records strong growth in corss-border acquisitions
Australia accounted for 24% of total investment in Asia Pacific in the second quarter, the largetst of any market.  Offshore investors including a number of Asian buyers were active during the period with the Sydney office market the subject of particularly keen interest.  Buyers are keen to enter this sector now in order to capitalise on rising occupier demand for premium office space and the anticipated rental growth predicted to take place over the next few years.

This is an extract from CBRE‘s Asia Pacific Capital Markets MarketView Q2 2011.  To read the full document please click here.

• Buyer sentiment weakens amid further tightening measures 
Tightened mortgage lending and rising interest rates continued to impact on buyer demand in most Asian markets in the second quarter of 2011, Concern over the regional economic outlook rose as the economic situation in the United States and Eurozone worsened in July, and further deterioration could have a knock on effect on the Asian economy.
 
• Transaction volume remains generally stable
Trading volume in Shanghai and Hong Kong declined on q-o-q basis in the second quarter whilst activity in Singapore remained steady. Southeast Asian markets displayed mixed results. With Ho Chi Minh City recording a significant fall in completed deals.
 
• Price appreciation begin to ease
The CBRE Asian Luxury Residential Capital Value Index rose by 2.5% q-o-q in the second quarter compared to a rise of 5.5% q-o-q recorded in the first quarter. In Hong Kong price appreciation moderated to 8.9% q-o-q from 14.0% in the first quarter, although the rate of growth nevertheless remained the fastest in the region. Capital value growth eased in the most first-tier cities in China following the implementation of further restrictions on home purchases. Prices in Bangkok and Ho Chi Minh were static as demand from end users was dampened by more stringent mortgage policies.

This is an extract from Asia Luxury Residential MarketView Q2 2011.  To read the full document please click here.

• Expansionary demand focuses on China whilst flight-to-quality increases
Demand for prime office space in Asia Pacific continued to grow in the second quarter with corporate remaining focused on expanding in the key Greater China markets. However, further deterioration of the economic situation in the United States and Eurozone would have a knock on effect on the regional economy. The period saw a significant increase in flight-to-quality activity, particularly in newly launched high-profile buildings and other iconic projects currently in the pipeline.

• Rental growth moderates in Asia but gathers momentum in the Pacific
The CB Richard Ellis Asia Pacific Office Rental Index rose 3.7% q-o-q in the second quarter thanks to robust occupier demand. Rental growth slowed in a number of Asian markets but falling vacancy in Australia provided rents with a boost. Greater China continued to enjoy the strongest growth in the region with rental increases in Beijing and Guangzhou exceeding expectations.

This is an extract from Asia Pacific Office MarketView Q2 2011, to read the full document please click here.

The Average Daily Rate (ADR) of upscale hotels decreased by 1.9% Y-o-Y. Luxury hotels saw a small decline in ADR of 4.7% Y-o-Y. First-class and mid-range hotels saw ADR increase by 1.6% Y-o-Y and 2.4% Y-o-Y, respectively.

The total supply of hotel rooms in Phuketincreased by 47 keys, to 12,096 keys at 76 hotels, in the first quarter of 2011 (0.4% Q-o-Q and 10.1% Y-o-Y). The additional supply was due to the opening of the TinideeHotel @ Phuket(Mid-range) that is located within the Loch Palm Golf Course. 

This is an extract from Phuket Hotel MarketView Q1 2011, please click here for the whole article.

One of the largest launches for the lower end of the market was Lumpini Ville Lasalle Bearing. The project sold well at launch the majority of the units were 22.50 square metres and the total price per unit was around 700,000 baht.

There were few new launches in the downtown area. The biggest project was the Circle Living Prototype Condominium developed by Fragant Property Limited which is located on New Phetchburi Road with 477 units with an average unit size of approximately 38 sq.m and a starting total unit price of approximately THB 4.0 million.

We think developers were more cautious because they saw sales slowdown after the large number of new launches in Q3 and Q4 2010 and the decrease in demand from speculators a number of whom were finding it harder to resell their existing units.

Prices for new projects are rising because of increased construction costs and land prices especially in the downtown area and along the routes of new mass transit systems.

This is an extract from Bangkok Residential Sales & Leasing MarketView Q1 2011, please click here to view the whole article.

The “west is best” in terms of location. The villa market is improving at the top end but most activity is in the low end villa and condominium sectors. The outlook is positive. There is latent demand for property in Phuket, what remains to be seen is whether the new developments that are coming to the market will meet the changing buyer profiles and offer something new to the market.

We believe that the information we have shows where future opportunities lie and would be pleased to discuss these ideas with developers and investors. CB Richard Ellis will continue to collect the best available market information and provide advice to clients so that their developments match buyer’s requirements.

This is an extract from Phuket Residential MarketView Q1 2011, Click to download the full report.

As the result of the growth in the tourism market in Bangkok, the average occupancy of upscale hotels in Bangkok increased to 65% in Q1 2011 from 59% in the same period last year. However, increased competition from new hotels continued to push down rates. Upscale hotels are especially affected by the increased competition which led to a decrease in the ADR of 15% Y-o-Y to THB 5,789. Revenue Per Available Room (RevPAR) was THB 3,685 in Q1 2011, a decrease of 9% Y-o-Y.

The solid performance of tourism market in the first quarter of 2011 is a strong indicator of the growth prospects for this year. However, the MICE market has not yet recovered as there is still political uncertainty.

Future supply entering the market will have significant impact on the performance of existing hotels. There are approximately 8,442 new keys scheduled to be added to the hotel stock by the end of 2014, bringing the total hotel supply to 38,999. This represents a 33% increase on current figures.

Increases in serviced apartment supply in the future will further intensify competition. The supply of serviced apartments increased by 6% Y-o-Y in Q1 2011 to 14,684 and is expected to grow by an additional 7% by the end of 2012.

This is an extract from Bangkok Luxury Hotel MarketView Q1 2011, click to download the full report.

In Q1 2011, the total supply of SILPs remained unchanged at 103,769 rai (41,507.6 acres). This was a 1.3% increase Y-o-Y from Q1 2010. The occupancy rate of ready-built factories was 87.5% in Q1 2011, up from 85.7% last quarter. The total supply was 1,330,698 sqm and the total amount of leased space was 1,164,916 sqm.

The total value of BOI-approved projects increased by 24.4% Y-o-Y from THB 88 billion in Q1 2010 to THB 110 billion in Q1 2011. Net Flow of Foreign Direct Investment (FDI) in the industrial sector in 2010 decreased by 24.3% Y-o-Y from THB 133.3 billion in 2009 to THB 100.9 billion in 2010.

In the first quarter of 2011, the asking price for land in the Amata Nakorn Industrial Estate increased to THB 5 million per rai. This was the first rise in 3 years. However, we believe other developers will still keep their prices flat until
they see if the increased price can really be achieved.

This is an extract from Thailand Industiral MarketView Q1 2011, click to download the full report

Although the Bank of Thailand increased the policy interest rate by 25 bps twice this quarter to 2.50% per annum, yields for property investments did not change significantly and money is still being driven into the property market due to lower yields on other fixed income investments.

1-year fixed bank deposit rates at the top five commercial banks increased slightly to 1.85%-2.00% and the yields from 1-year government bonds rose to 2.5%-2.8%. Local investors sought income-producing properties with more appealing yields compared to bonds and bank deposits. When incomeproducing properties have come onto the market, there have generally been multiple bidders, demonstrating the continued level of demand for this type of property.

This is an extract from Thailand Investment MarketView Q1 2011, click to download the full report.