The construction sector is expected to record growth from 2019-21 as investors await greater clarity on megaproject policies after the forming of the new government, says Krungsri Research.
Piyanuch Sathapongpakdee, senior analyst for the research house, said the new administration is likely to implement many infrastructure projects, though growth for the sector is only 3.5-5% in 2019, valued at 1.31-1.33 trillion baht.
But the construction sector will accelerate in 2020-21, with growth of 5-9.5% and a value of 1.37-1.56 trillion baht as more disbursement for projects begins, said Ms Piyanuch.
In 2019, public construction projects have a combined value of 729-743 billion baht, a projected 3-5% rise.
The new government may initially be unclear regarding current and future construction projects, she said.
Krungsri Research expects state construction projects to tally 826-874 billion baht by 2021.
Ms Piyanuch said there are many developments in the pipeline from 2019-21 such as new mass transit lines in Bangkok metropolitan areas; five infrastructure projects in the Eastern Economic Corridor (EEC); new light rail transit in Chiang Mai, Khon Kaen, Nakhon Ratchasima, Phuket and Phitsanulok; light railway systems; and airport expansions.
Moreover, a greater number of medium and small projects are planned, for which allocations are made in the annual budget, such as expansions and upgrades to the national road network.
"Over the next three years, investments in construction, operations and repairs for public megaprojects can be moved forward," she said.
"In addition, many projects under public-private partnerships [PPPs] will be undertaken through net cost PPP agreements because these grant the private sector rights to collect income and help the government cut operating costs."
For new construction plans from the private sector, Ms Piyanuch said these tend to grow in step with general economic conditions, although operators will also benefit from crowding-in effects, triggered by government spending.
Private sector construction is projected to grow 4-5% in 2019 to 579-585 billion baht.
"This slowing of activities is in line with a softening of the economy, as operators await further progress on government-backed infrastructure before moving forward with investment," she said.
"The tightening of conditions on issuing house loans by both lenders and the regulator, following tighter mortgage lending rules as of April 1, will likely limit growth in the housing market."
But private construction projects are expected to reach a value of 651-682 billion baht by 2021, said Krungsri Research.
"The higher rates are supported by several factors. Greater progress with upgrades to communications networks will tend to pull in private sector investment through the crowding-in effect, such as residential accommodation being built as mass transit systems expand," said Ms Piyanuch.
"Progress on EEC development is helping to support a higher level of construction of commercial buildings, industrial estates and hotels, while the private sector is increasing its investments in mixed-use projects."
She said the new government will spend on large-scale projects, while the private sector will be buoyed by improving confidence and strengthening economic fundamentals.
The research house said the construction sector generated 1.26 billion baht last year, up 4.3% year-on-year.
With a 0.9% contraction recorded in 2017, the turnaround last year was attributed to greater progress on new projects, with many pushed through to completion.
Public construction, accounting for 56% of the total value of Thailand's construction, was at a lower level than that of the private sector, which has seen its value grow at a faster pace over the last four years because of work on projects for residential properties.
Krungsri Research said stronger economies and continuing urbanisation in neighbouring countries are also feeding greater demand for real estate developments and improvements to infrastructure.
