With an urban population of over 300 million people and with a construction market volume valued at more than USD 250 billion, Southeast Asia has become one of the most attractive target markets of for the A/E/C industry worldwide.
Thailand's Residential sector, after the expansion of the subway, has seen a rapid economic development in the vicinity outside Bangkok suggesting an expansion of the condominium market. The Thai Shopping Association has announced a policy with the aim of making Thailand a regional shopping hub, the construction of new shopping malls, hotels and restaurants will boost the Commercial sector growth. After the government's approval of the Eastern Economic Corridor, the Industrial sector and urban development are aiming at making Thailand ASEAN's leading economic zone, and become a key area for foreign investment.
According to our report, Will Thailand 2.0 revive the construction industry?, even though Thailand's construction sector has seen a slowdown between 2014-2015 with a slight decrease of -2% CAGR, the future outlook is optimistic and will present new challenges and opportunities for foreign investments.
The overall number of residential buildings rose with an increase of 1.4% per year, in particular the Commercial sector has seen growth in demand for commercial buildings with a CAGR of 6.5% due to a surge of SMEs in the country. Meanwhile the Industrial sector grow with a CAGR of 13.1%, mainly driven by an expansion of automotive plants.
Despite the fact that Bangkok holds most of the market share, development of public transport and increased urbanization in tier 2 cities will affect the construction landscape in the long run.
The Residential Sector
The overall number of new residential construction has remained stable between 2012 and 2014, and represents over 30% of the country's project. Twin houses have shown the biggest growth with a CAGR of 41.7% between 2012-2014. The second major residential type, townhouses, have shown a CAGR growth of 5.7% in the same period.
The capital's condominium market fell by a CAGR of -2.5% saturated by the surplus of offer and limited demand growth. Meanwhile, following the expansion of the subway infrastructure, market for the vicinity areas saw an increase with a CAGR of 24.2% between 2010 and 2014.
The Commercial Sector: Strengthening Thailand's position as ASEAN's shopping hub
Thailand's commercial sector has been driven by a higher demand for shopping malls and restaurants, and has shown an overall growth with a CAGR of 6.% in the period between 2012-2014.
The TSCA has announced a policy of pushing Thailand to become a regional shopping hub, and members of the association are planning to open new shopping centers in multiple locations. Moreover, the tourism industry has also expanded in recent years, from around 22 million in 2012 to over 29 million in 2015, an average of 41.7% yearly between 2012-2015.
The Industrial Sector: New zones, new growth
The government's willingness to make Thailand as ASEAN's leading economic zone in selected industries is driving the industrial construction sector. The overall number of industrial construction grew with a CAGR of 13% between 2012 to 2014. Through the new S-curve initiative the government is supporting Special Economic Zones (SEZs), mainly targeting Chinese investors.
The government also approved infrastructure plans for developing the Eastern Economic Corridor, spanning from Pattaya to Rayong, and focusing on the construction of transport, sea and rail infrastructure.Download White Paper