There is strong demand for new luxury high-rise developments in Bangkok, suggesting that buying power and sentiment is unaffected by the sluggish Thai economy.
Those are the findings from real estate firm JLL in its latest research report covering Bangkok’s high-end and luxury residential property market, published today.
The real estate firm noted a 1 percent rise in rental growth year-on-year, whilst at the same time reporting that growth in the sector is slowing.
It said there was healthy demand for newly launched condominium projects during the second quarter of 2015, with ten new projects coming to the market with an average of 60 percent of the total number of units being sold. It also noted that two of these ten developments achieved a 100 percent pre-sales rate.
The leasing market for luxury apartments remained active in the three months ending June 2015, according to the research, as expatriates continued to view luxury units as a viable rental option. Luxury apartments are typically less expensive than serviced apartments, it noted, while often providing better management services and facilities than condominium units for rent.
Sounding notes of caution, JLL reported that labour shortages continued to cause delays to the completion of some new condominium projects. It said eight condominiums – one in the luxury sector and seven in the high-end sector – were delayed because of labour shortages.
It noted that Mirage Sukhumvit 27 was the only completed project during the quarter, adding 116 units to the existing 31,500 units in the sector as at the end of Q2 2015.
JLL reported that ten new “ultra-luxury” condominium projects with a total of 3,696 units were launched during April, May and June alone, with scheduled completion dates ranging between 2016 and 2019. It said the vacancy rate in the luxury apartment sector declined from 6.3 percent in the first quarter to 6.2 percent in Q2.
Slow rental growth
In the Bangkok condominium segment, gross rents rose to THB 516 per sqm per month, a very slight increase of 0.2 percent quarter-on-quarter (q-o-q). Apartment rents rose by 1 percent q-o-q to stand at THB 363 per sqm per month. Capital values edged upwards by 0.1 basis points q-o-q to THB 111.225 per sqm.
During the quarter there were two significant land acquisitions in the centre of the Thai capital. SC Asset PLC acquired a prime 4,836 sqm development site on Chidlom Road for THB 6.65 billion, while Sansiri PLC purchased a 3,344 sqm plot on Sukhumvit 38 for THB 1.7 billion.
Firm demand
According to JLL, the outlook for high-end condominiums and luxury apartments remains firm.
Almost 3,900 new high-end condominium units in 17 projects located in central Bangkok and the central east area of the city are expected to the completed before the end of this year.
“The high-end and luxury residential property markets in Bangkok are expected to remain strong throughout 2015, with healthy demand for the top end of the market,” it concluded in its research.
ADD (20/8/2015): For clarity, in Thailand an apartment development refers to a residential building that is owned by a single owner who offers units for rent only. Condominiums are for sale. We hope this clarification adds to your understanding and apologise for any confusion.
