With a limited supply of land will people start turning to old buildings?
Brand new condominiums in Thailand literally fly out the door in the first phase. Not only are speculators keen to profit from capital appreciation as the next phase is released, but there is a real desire for people to live in a new building. In Asia anything over 20 years old is considered to be an old building. Whereas in cities such as London and Paris, most properties were built over 100 years ago.
Desirable characteristics
These old style properties in London tend to be the ones most in demand. The reason for this is twofold, firstly they possess features such high ceilings, ceilings roses, original fireplaces and even wooden panelling on the walls that newer properties do not have. But secondly there are only a limited supply of them, they cannot be replaced and thus they retain their value. In fact it is sometimes the case period properties, as they are known as, gain more capital appreciation than newer buildings.
Having said that the one fear people have about period properties is their age. People assume that just because they are old on the outside that they are old on the inside. This is certainly not the case. With limited supply of land in central London and certain conservation requirements protecting the buildings and the aesthetics of an area, developers are not simply allowed to knock a period building and replace with a shiny new one.
However in most period properties, the interiors are extensively refurbished with all the modern conveniences and trends that are the norm in a brand new building. And in some cases, the facade of the building is kept and a newer building is built behind it to give the illusion of an older building.
More space
Bangkok does not possess many buildings with ornate features like London does. But as land prices increase, developers are squeezing more and more units into the building to ensure that their project is profitable. The result is smaller units, some new two bedroom units are the same size as a one bedroom unit in an old building. The price you pay for something brand new is size.
Old buildings in Bangkok are spacious. They have larger living areas, bedrooms and the whole condominium is likely to have larger communal areas with more facilities as land was not as such a premium when it was built. They typically are built better too with strong materials for better sound proofing qualities.
As the demand for luxury properties continues to escalate, brand new buildings will always be a success. The top end of the market permits bigger unit sizes, but for mid and low range projects, a trend for old buildings is likely to prevail. Already many renters are opting for older buildings just for the space.
Value for money
With lower price tags for renters and investors, old properties certainly do have their appeal. For purchasers there is the option to refurbish the interiors to bring it up to spec in exactly the style you want. Many condominium and apartment owners do just that for their renters. Real Estate firm Edmund Tie and Company have already seen strong demand for condominium resale units in Bangkok’s CBD. A trend that they forecast to continue thanks to the limited supply of land within the city.
But the mindset of investors to turn to old buildings needs to change if the second hand market is set to flourish for the long term.
