By Kanana Katharangsiporn  and Pitsinee Jitpleecheep
        Developers are proceeding with caution in the residential market and hitting the brakes on retail expansion.
        Prospects for Thailand's property and retail markets remain cloudy in 2020, albeit slightly better than in 2019, with a domestic economic slowdown and overall weak consumption the key threats.
        Property experts predict more hard times ahead. Homebuyers' struggles to obtain mortgage loans signal a stagnant market in 2020, though property tax incentives should help revive activity.
        The incentives, which run from Nov 2, 2019 to Dec 24, 2020, include cuts in transfer and mortgage fees to 0.01% from 1% and 2%, respectively, for a housing unit valued at 3 million baht or less.
        The incentives and the low-rate environment will boost property market growth by no more than 5% in 2020, said Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC).
        "These positive factors will also help reduce housing inventory in the second half of 2019 by 2.4%, compared with a situation without the incentives," he said. "But developers should not launch too much supply in 2020."
        According to the REIC, the amount of residential inventory nationwide totalled 270,131 units at the end of June 2019 and will decline to 257,969 units by the end of 2019 after the tax incentives took effect in November.
        The number will continue to decline in the frst and second half of 2020 with drops of 9.9% and 15.2% respectively, the REIC said, based on the assumption that new supply is consistent with the fve-year average amount of 95,000 units nationwide.
        Nearly two-thirds of nationwide housing stock at the end of June 2019 consisted of units priced at 3 million baht or less, or 140,000 units worth 210 billion baht out of a total of 220,000.
        Greater Bangkok had 95,462 unsold units in the frst half of 2019. Of this amount, 50.8% or 48,465 units were priced at 3 million baht and less.
        "In 2020, developers should focus on inventory and stock management to keep the amount as low as possible," Mr Vichai said. "They should also monitor the market situation before deciding to launch new supply."
        He said the property incentives should help homebuyers in the mass-market segment. These price ranges account for more than 50% of market share.
        According to market research by SET-listed developer Pruksa Holding Plc, residential market value in Greater Bangkok saw a yearon-year drop for three straight quarters from the frst quarter of 2019.
        The market in the frst, second and third quarters of 2019 shrank 18%, 8% and 35% respectively from year-earlier levels. The year-on-year drop in the third quarter was the biggest in the past several years.
        Quarter-on-quarter declines had continued since the third quarter of 2018. The market marginally recovered in the third quarter of 2019 with a quarter-on-quarter rise of 0.8% to 100.6 billion baht, driven by the condo segment.
        But condos suffered the largest year-onyear drop in the third quarter of 2019, tumbling 28% to 160.3 billion baht. Single-detached houses saw a 20% decline to 73.83 billion baht, while the townhouse segment dipped 8% to 60.62 billion baht.
        Supattra Paopiamsap, Pruksa Holding's deputy group CEO, said there were no positive signs for the global and Thai economies throughout 2019.
        "Housing demand was strong, but purchasing power dropped and customers were unable to get mortgage lending," she said. "Mortgage lending rules are stricter and the approval process takes longer."
        She suggested developers launch new residential projects in the right locations with the right timing and the right target buyers. If a location seems weak, developers should postpone the launch.
        "Condo developers should seek locations where real demand is strong, as investment buyers are getting hit by the new lending curbs and foreign buyers face a strong baht and the world's economic slowdown," Mrs Supattra said.
        The land and buildings tax is a new factor that developers should take into account from 2020, she said. For Pruksa, the additional cost from the tax is estimated at 20-25 million baht per year.
        Pornarit Chounchaisit, president of the Thai Real Estate Association, said property developers should adjust their strategies to survive amid the market slowdown and compete with foreign players.
        "The property market in 2020 will maybe not be as poor as expected, but consumers just lack confdence to make a decision," Mr Pornarit said. "Infrastructure investment is key to driving the market."
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        The 3.6-trillion-baht retail market in 2020 may be less bright than hoped, as various negative factors could stall the expansion pace.
        A continuously strong baht is one of the top concerns among retailers because it may scare away foreign tourists, particularly Chinese, and weaken export competitiveness.
        The frm baht could also prompt more Thais to travel abroad, while overall investment sentiment is unlikely to recover because of the global slowdown. Household debt remains high, and crop prices are far from stable.
Kasikorn Research Center forecasts Thailand's retail business in 2020 to grow by 2.7-3%.
        The research house said sectors focused on middle- to low-income earners, like traditional mom-and-pop stores and hypermarkets, could have difficulties, while the prospects for supermarkets and e-commerce operators remain positive.
        "Thailand's retail business has recorded growth lower than that of the country's GDP for the past two years," said a source from the Thai Retailers Association (TRA) who asked not to be named. "We expect 2020 to be another challenging and difficult year."
        According to the source, there will be no investment in new megaprojects in the country in 2020. Moreover, several of the TRA's members are looking at business opportunities abroad.
        Even so, Sudhitham Chirathivat, chairman of the advisory board at Central Group, said Central will continue investment in 2020, but at a much slower rate than in 2019, when the company splurged 40-50 billion baht.
        "We're concerned about the world's economic situation, particularly in Europe and the US," Mr Sudhitham said. "Although we will keep investing, we will be more cautious about it."
        Pasitt Munkongkuntivong, general manager of Watsons Thailand, the health and beauty store chain, wasn't ready to say whether Thailand's retail market would fare better in 2020.
        "Nonetheless, the situation may not be worse than 2019," he said. "Watsons is maintaining investment in Thailand because the health and beauty sector remains promising. Our sales are expected to grow beyond the industry's growth rate."
Chadatip Chutrakul, chief executive of Siam Piwat Co, said the company is keeping a close watch on the situation, but she still believes in the long-term prospects of Thailand's retail market.
        "Thailand remains attractive to foreign investment," she said. "At Iconsiam, for instance, the company's new shopping complex has long waiting lists of retailers in many sectors from fashion, food and beauty to open there."
Voralak Tulaphorn, chief marketing officer of The Mall Group, said overall consumer spending power began improving in October 2019 and the hopes is for continued momentum in 2020.
        "But the competition will become fercer," she said.
        Wuttikiat Techamongklapiwat, president of Robinson Plc, said the company will keep investing in 2020 to help stimulate the domestic economy.
        He said opportunities exist for a business no matter what the economic situation, but caution is advised.
        Surachet Kongcheep, managing director of Phoenix Property Development and Consultancy Co, said Thailand's retail market is unlikely to recover in 2020 because of the overall economic slowdown.
        As of October 2019, existing retail space in Bangkok and the surrounding area was estimated at 8.406 million square metres. Total new retail added in Bangkok and the surrounding area from January to October totalled 160,000 sq m; about 100,000 sq m was expected to be in operation in the fourth quarter of 2019. For the whole of 2019, total supply is estimated at 260,000 sq m.
        "Many community malls are now being affected by low purchasing power, and many tenants cannot maintain their spaces, leading some community mall owners to sell their projects to real estate investment trusts," Mr Surachet said.
        Nonetheless, he said many retail projects are now under renovation or redecoration, while retail operators have relocated tenants or added new brands to set themselves apart and make their complexes more enticing to shoppers.
Mr Surachet sees 39,000 sq m of new retail space being completed in 2020, with 11,000 sq m stemming from The Parq on Rama IV Road.
        Many community malls are now being affected by low purchasing power.
        SURACHET KONGCHEEP Managing director of Phoenix Property Development and Consultancy Co