ECONOMIC OVERVIEW

April 2021 saw the emergence of a third wave of COVID-19, which appears to be the worst yet experienced by the country. Coupled with the delayed mass vaccine rollout, which is now expected to begin in June this year, and national vaccine skepticism, forecasts of a recovery are being minimised and timelines extended. The Bank of Thailand has revised their GDP forecast down from 3% to between 1-2%, with the worst-case scenario based on the assumption that the country does not reach heard immunity within the year and that the rate of unemployment grows. In April 2021, the Consumer Price Index increased to 100.5 points from 99.11 points in March 2021 demonstrating a slight increase in prices for food and non-alcoholic beverages.

The Thai government has maintained it’s ‘sandbox program’ to allow vaccinated travelers to enter Phuket by August without quarantine, planning to expand the program into more key tourist destinations by Q4/2021. In April Thailand reduced its mandatory quarantine-on-arrival period from 14 days to 10 or 7 days for vaccinated travelers. However, due to the third wave of the virus, the Thai government announced a reversal of this plan and now requires all arrivals to quarantine for the full 14 days.

SUPPLY

Between 2016 and 2020 retail supply increased by almost 1.1 million sq m, with Bangkok’s total retail supply reaching 8.22 million sq m (NLA) with an average annual growth rate of 1% YoY. 2.16 million sq m of the supply is considered to be prime retail, distributed over the CBD, downtown, midtown and suburban areas. There were no retail developments launched in 1H/2021, though there is 300,000 sq m of new retail supply expected to complete by 2024. Compared to the previous five years, the overall future retail supply is growing at a similar rate of approximately 1% per annum on average, though the rate may continue to reduce as developments are delayed/ postponed.

The impact of COVID-19 has led to some developments delaying their construction phases, the most notable being Bangkok Mall, a large mixed-use scheme on Bangna-Trad Road, and One Bangkok, a large mixed-use scheme on Rama 4 Road, which have delayed their final phases from 2020 to 2023 and 2024 to 2027, respectively. Both developers, The Mall Group and Fraser Property, have announced that further delays would be considered if market conditions continue to deteriorate. It is likely that other developers will follow this trend, especially in cases where construction has not started yet.