Real estate firm Nexus Property Marketing has revealed its prediction that the residential property market in Bangkok will continue growing at a steady pace.
It said that new supply in the condominium market will likely add 50,000 units – with a rise of at least 7 percent in prices. It said that inner-city condos will see a higher increase in prices than the suburban market.
Supply
During 2015 there were a total of 53,500 condominium units from 111 projects launched in Bangkok, resulting in the total number of condominium in the market rise by 13 percent from 2014 to 447,000 units. The growth rate of condominium supply during the past five years has been approximately 22 percent per year.
During the past two years growth was slowed but, according to the firm, represented a good sign of market adjustment to suit the overall economic and market situation.
The top three locations where new supply rose during the previous year were, in orderm Phra Khanong – Suan Luang, Tiwanon – Rattanathibeth and Phetchakasem – Thon Buri. All of these three zones are along an extension line of the mass-transit network.
Demand
For condominium demand average sales of condominiums that were newly launched in the market was 59 percent in 2015. Sales of the existing condominiums in the market totaled 54,000 units last year, and accumulative sales of condominium totaled 393,000 units which represented an overall sales rate of 89 percent, the firm noted.
Price
Average condominium prices continued rising with an increase of up to 10 percent from THB 96,000 per sqm to THB 106,000 per sqm in 2015, particularly for the inner-city condominium market. This was mainly due to high land costs and products which are in the premium grade category.
For new projects launched in those three locations mentioned above along an extension line of the mass-transit line, selling prices were approximately between THB 68,000 per sqm and THB 76,000 per sqm.
Condominium Market Trends for 2016
Super luxury and luxury condominium market: There will be more than 500 new units in the super luxury market this year. Most developers of these projects will be large developers with an international or good domestic reputation, as buyers need to be confident in both the brand and image of the project as well as developer. Demand in this market is not only coming from Thais, but also from international markets including Asia, the Middle East and Europe. Condominium prices in this segment start at THB 250,000 per sqm to THB 300,000 per sqm, and will likely rise up to HB 500,000 per sqm. Unit price starts at more than THB 20 million.
High-end Condominium Market: Condominium prices in this market range from THB 150,000 per sqm to THB 250,000 per sqm. Locations are usually close to the mass-transit lines in the inner city, while most developers are medium-to large-sized developers who can buy land plots at high prices. Condominium prices mostly in the THB 5 million to THB 12 million per unit range with one- to two-bedrooms. During the previous year some projects recorded good sales during their presale periods, while some had recorded between 30 percent and 50 percent sales. There is some concern in this market in a long run when projects are completed. Since the affordability of Bangkok people is a key factor to consider in this segment, whether this is real demand is the big question. For condominium speculation, the question is how much demand during the next one to two years will be able to be absorbed into this market.
City Condominium Market: There are two groups in the city condo segment: Group 1 is units priced between THB 2.5 million and THB 5 million baht (between THB 80,000 per sqm and THB 120,000 per sqm). Group 2 is units priced between THB 1 million and THB 2.5 million (THB 50,000 per sqm to THB 80,000 per sqm). Buyers in this market are mostly Thais who mainly buy for residence, family expansion and as a first home. Some buyers are those who are seeking a second home for a temporary stay, or as an investment. This product is situated in convenient locations, and price is a key factor to consider when buying a unit, followed by function and usable space. Developers in this segment will also be smaller developers compared to other segments, because branding and image in this segment is less important than I other segments, and smaller developers likely have lower costs of development. Demand in this segment is growing at a steady rate, given the fact that price per unit will not be far above their affordability.
Attractive locations for condominium in Bangkok remain super-prime locations, such as Langsuan, Ploen Chit, Sala Daeng, Phrom Phong and Thong Lo – while riverfront locations are eye-catching among many investors in both luxury and city condos. Locations near an extension line of the mass-transit systems, like the Green Line, the Yellow Line, the Orange Line and the Purple Line, are also appealing. However, for land along mass-transit routes, price is a key factor that will greatly affect developers in terms of product development to match the demands of consumers in the middle segment.
