In 2015 Thailand will become part of the ASEAN Economic Community (AEC), which will provide it members with a single market in a highly competitive economic region and will be fully integrated into the global economy. This market will make Southeast Asia with the freedom to freely integrate capital, goods and services and have huge benefits to Thailand, with Bangkok being its main benefactor.
Its neighbours, such as Myanmar, Laos, Vietnam, Philippines and Cambodia have very wealthy investors that do not have the vast range of properties that the Bangkok property market enjoys, and they will soon be looking at ways to invest their money in cities like Bangkok. Thailand is the ideal location for them and there is huge potential for an massive influx of foreign capital from the region.
Another aspect of the AEC is Bangkok’s shopping plazas and the expansion of its cross-border border trade that reached almost a trillion baht last year. What may be said about the foreign residents in the city that malls have expanded far too rapidly but this is a business that the country has focused on and Thailand is headed in this direction in order to take full advantage of the region’s trade in shopping.
This large shopping infrastructure has turned Bangkok into a veritable shopping mecca of Southeast Asia and is competing with the likes of Hong Kong and Singapore for the centre where the people of the AEC will to come to shop. With the opening up of the AEC, this will make Bangkok the focus of the region’s shopping centres as it will become the city to find mid-ranged items. It has already established itself as the region’s strategic shopping location and will continue to grow as the launch of the AEC nears.
Another likely consequence is that the Bangkok property market will take a vertical leap in property prices. Bangkok’s city centre has more than doubled its prices over the last decade. With the advent of the AEC it will see property prices escalate as more Southeast Asian investors speculatively look at Thailand for profit-taking.
Then there is the city’s infrastructure with its vast metro systems. Although far from perfect, Bangkok trumps most of its neighbours in the region in that its property prices are highly competitive when you look at comparisons with say Singapore, which are on average six times more expensive.
But the real winner for the Bangkok condos market will be the AEC as there will be better cooperation in macroeconomic and financial policies and trade financing measures. There will also be an enhanced infrastructure and communications connectivity and, in short, the AEC will transform ASEAN into a region with free movement of goods, services, investment, skilled labour and a freer flow of capital, which Bangkok is bound to capitalise on.