SOUTHEAST ASIA OUTLOOK 2025

Southeast Asia Outlook 2025: Long-Term Growth Prospects Remain Intact

Key Property Data

PIPELINE SUPPLY OVER CURRENT INVENTORY RATIO (%)

RENTS Q4 2024 (THB PSF PM) 2025 FORECAST

VACANCY Q4 2024 (%) 2025 FORECAST

CURRENT INVENTORY (MILLION SF)

PIPELINE SUPPLY (MILLION SF)

CAPITAL VALUE OUTLOOK 2025

OFFICE (BANGKOK CBD GRADE A) RETAIL (BANGKOK CBD GRADE A)* LOGISTICS (NATION-WIDE) RESIDENTIAL (BANGKOK ALL GRADES)

88.3

27.8

26.6

3.3

12.5%

345.4

4.1

10.6

1.4

13.1%

14.4

21.4

64.5

4.3

6.7%

61.8*** (% sold rate)

12,181**

493,899 units

2,431 units

0.5%

Source: Cushman & Wakefield Research * Grade A Shopping Mall, Department Store, and Community Mall Project in CBD areas ** Average Selling Price Per Unit ***Average Sold Rate of New Launched Condominium

THAILAND MARKET SNAPSHOT

Occupier Market Commentary and Recommendations Office: Demand for office space has been growing, with tenants seeking high quality office spaces with sustainable and smart building facilities. Vacancy rates

Logistics: Demand for warehouse space has seen continued expansion, while rents remain at below the pre-COVID level. We expect rents to again increase through 2025, though it may remain below 2019 levels. However, vacancy rates could rise amidst higher supply in 2025 Residential: Average selling prices, and sold rate are projected to increase. Condominium unit demand is forecast to rise from both domestic and foreign buyers. New supply will slowly expand in 2025.

are expected to be lower. Ahead, rental levels are expected to rise in 2025, with just one new Grade A office building completion due for the year. Retail: Grade A shopping malls in CRD locations will face greater challenges in drawing in shoppers in 2025, with new Grade A retail spaces launching. Vacancy rate is expected to increase as new mall completions in the city’s fringe areas are now ready to attract some tenants to move from CRD areas.

Economy Thailand’s economy is expected to continue growing in 2025. Thai economy is projected to grow between 2.3% and 3.3% in 2025, inflation rate is expected to be between 0.3% and 1.3% in 2025, helped by expected stronger economic growth and government stimulus measures. Key drivers of growth include increased government consumption and investment, robust domestic private demand, continued recovery in the tourism sector, increased private consumption and investment, and sustained expansion in exports. Key risks and challenges includes (i) escalating trade tensions, US policy uncertainty, and geopolitical risk; (ii) influx of Chinese imports; (iii) climate fluctuations (risk of La Niña); (iv) structural problems such as high household debt and weaker competitiveness; (v) policy uncertainty and political risk in Thailand.

Investment Opportunities And Recommendations The industrial market in Thailand is a vital component of the country’s economy, characterized by diverse sectors and significant growth potential. Eastern Economic Corridor (EEC) is a major initiative aimed at boosting industrial development Investors are increasingly seeking to invest in industrial property. The market is becoming increasingly competitive; land in strong locations is becoming difficult to access at meaningful amounts owing to burgeoning land banks from key players. Traditionally commercial landlords and developers are now seeking to diversify and utilize their landbanks in the L&I sector. Finding a suitable joint venture partner to enable land acquisition & operations remains a viable investment route. Amidst geopolitical tensions, Thailand remains a credible alternative investment for both international and chinese investors looking for diversification. Thailand Industrial property has seen continued traction for investment led by automotive, electrical & electronics, machinery & vehicles. The Asia Pacific consensus forecasts indicate Thailand’s net FDI will rise to USD 12.4 bn in 2025 vs an estimated USD 8.8 bn in 2024 led by Singapore, China, Hong Kong, Taiwan and Japan. Demand for Grade A office space leasing in CBD area could continue to grow. We witnessed growing leasing trends for flight-to-quality relocations from older office buildings to newer properties across all grades and submarkets in Bangkok, with tenants seeking high quality office spaces with sustainable and smart building facilities. Future new Grade A office supply of 309,430 sqm will be in the CBD areas. Recent Significant Deals

Key Market Developments KEY INFRASTRUCTURE/ECONOMIC DEVELOPMENTS (EXPECTED COMPLETION) • Laem Chabang Port Phase 3 development project (Phase 1: 2025, Phase 2: 2027)

TYPE

IMPLICATIONS / AREAS TO WATCH

• Infrastructure

• Phase 3 includes the construction of five new berths and two rail freight yards, increasing the port’s capacity to handle up to 18 million TEUs per year, up from 11 million TEUs at current. • It will generate revenue and create business opportunities for local entrepreneurs, positioning the port as a central hub for cargo transportation in the Indochina region. • Increase the annual passenger handling capacity of the airport from 60 million at the current year to 150 million in the future. • The first phase accommodating 12 million passengers. • The development is expected to create business opportunities for both local and international private sectors, promoting investment in the Eastern Economic Corridor (EEC) area.

• Suvarnabhumi International Airport Development (Phase 4 and 5: 2030)

• Infrastructure

PRICE (MIL USD) / US $PSF

PROPERTY NAME BUYER

SELLER

PROPERTY TYPE

NET YIELD (%) DATE

Grand Residence International Company Limited

Hyatt Regency Bangkok Sukhumvit

149.3 / 547,232 per room

Property Perfect PCL

Hotel

-

Q4 2024

• The Development of U-Tapao Airport and the Eastern Aviation City (2028)

• Infrastructure

Terminal21 Pattaya

LHSC Leasehold REIT

Land & Houses PLC

Retail

146.2 / 315 psf

-

Q4 2024

Pinthong Industrial Park 1 SNC Creativity Anthology Warehouse Origin Plug & Play Sai Luat Station

AIM Industrial Growth REIT Pinthong Industrial Park PF Industrial

44 / 48 psf

-

Q4 2024

Montri Transport Corporation Public Company Limited

SNC Former Public Company Limited

Industrial

30.8 / 41 psf

-

Q4 2024

Source: Cushman & Wakefield Research

Delta Electronics

Origin Property

Condo

18.3 / 167 psf

-

Q3 2024

Source: RCA, Cushman & Wakefield Research

26

27

CUSHMAN & WAKEFIELD