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9 Jan 2014

Real Estate and Construction

Thai Construction Industry Facing Slowdown, Challenges Ahead (Current Issue No. 2450 Full Ed.)

KResearch holds the view that in 2014, Thai construction industry overall will likely grow at a slower rate than seen last year. This forecast lays the blame on political uncertainty that is affecting the economy, trade and investment, as well as formulation of policies vis-à-vis national infrastructural investments and development – thus a factor inescapably impacting construction sector growth. It will be essential to monitor the consistency of global economic revival, since it will determine FDI entering Thailand.
Despite that, the construction sector should be bolstered by regional economic momentum, notably in commercial construction, thanks to booming border trade and investment. Moreover, infrastructural investments in neighboring states have been thriving on the impetus of the upcoming AEC in 2015. That development should mean exciting opportunities for provincial contractors to cash in on joint ventures. In view of that, Thailand's construction industry may expand around 2.5-5.0 percent YoY to a total of THB0.99-1.02 trillion in 2014, and would thus beat KResearch's 2013 growth estimate of THB0.97 trillion.

But the other hand, the not-yet fully exploited construction sector will help diminish pressure from workforce shortage and rocketing prices of construction materials as a result of several state megaproject investments. However, since the THB2-trillion transportation infrastructural plan is being delayed, construction companies will have more time to properly manage material costs that are expected to rise with the coming of large construction projects in the near future.

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