Mixed-use projects … bringing both opportunities and risks to the commercial real estate rental industry
Mixed-use property projects are an interesting investment alternative for real estate developers, especially under the current volatile economic...
Mixed-use property projects are an interesting investment alternative for real estate developers, especially under the current volatile economic environment. This is because the projects diversify streams of income from the different integrated property formats, enabling a more stable recurring income as opposed to dependency on a single type of real estate format. Furthermore, mixed-use projects increase and maximize land-use efficiency, especially in prime areas with expensive land price.
Going forward, the growing supply of mixed-use projects in Bangkok, especially when compared to the past, could lead to an oversupply in the real estate market. Commercial space for rent should see the most impact. Data suggests that within the next 3 years, a new mixed-use supply of approximately 900,000 square meters from commercial projects is expected, accounting for 40% of new supply within the same period. These new mixed-use supplies will be clustered in the central business district (CBD), which is already crowded with similar real estate supply. With such regards, competition in the real estate market should be fiercer in the near future.
The development of several new mixed-use projects will increase competition among the mixed-use projects themselves with impact on single use buildings, such as office buildings, department stores, and hotels within the proximity as well. For this reason, single use project developers might need to lower sales/ rent, shift project launch timeline, or undergo renovations to attract tenants or customers and retain competitiveness.