A Jones Lang LaSalle Thailand (JLL) report says that a slew of high-end condominium projects will launch in Bangkok this year, bringing the total stock to 22,834. According to the company’s managing director Suphin Mechuchep, luxury condo developers are now more confident in both local and the world economies. Several projects postponed their launches last year due to political instability and a lack of confidence in economies
A Jones Lang LaSalle Thailand (JLL) report says that a slew of high-end condominium projects will launch in Bangkok this year, bringing the total stock to 22,834.
According to the company’s managing director Suphin Mechuchep, luxury condo developers are now more confident in both local and the world economies. Several projects postponed their launches last year due to political instability and a lack of confidence in economies.
She said that the renewal of demand from overseas buyers would also help increase the number of high-end launches in 2011.
According to JLL research, the newly launched condominium units in central Bangkok and priced around THB150,000 (US$4,860) psm were 1,180 last year, dropping from 2,300 in 2009. Newly completed units were down to 2,678 from 3,589 during the same period.
The report also says that around 1,894 units in the high-end segment will be completed within this year, while the total stock of luxury condos will rise to 22,834 this year, from 20,940 units in 2010 and 18,262 in 2009.
As reported in the Bangkok Post newspaper, average prices of new high-end projects are expected to increase at least 5 per cent due to a rise in land and construction costs. Last year, they dropped from THB162,000 (US$5,250) psm to THB155,000 (US$5,020) when developers adjusted their products to fit demand at the time.
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Thailand Property market
There are so many positives to publicise and be proud of, from the continued strong fundamentals of the Thai economy (which are the envy of most Western countries) to the spirit shown by Bangkok’s residents in coming together to clean up Ratchaprasong in the days after the protests.
Some observers are concerned that the global financial crisis may affect the Thai real estate market. Generally, a real estate bubble occurs when property prices rise quickly in a short period, primarily from speculation – resulting in a supply-and-demand imbalance. When property prices are rising faster than the cost of money and banks continue increasing loan-to-value ratios, funding becomes easier – propelling additional speculation.
The completion of the Suvarnabhumi-Bangkok International Airport has spurred growth in commercial property markets in eastern Bangkok as well as in the beach resort of Pattaya. Thailand has become even more accessible by air with a wide range if International carriers using Bangkok as a hub. In recent years, there has also been a surge in budge carriers, offering very competitive prices to both local and international destinations.
Compared to 1997 Real estate companies are able to respond much more quickly to changes
Thailand’s property market was able to rebound from past crises and there is every reason to believe it will be able to absorb the blow of recent political tensions. The taxation situation has actually improved the conditions for purchasing property in Thailand, and if property prices do dip slightly as a result of the current situation it may actually be a good time to buy as there is a very real possibility Thailand property will regain its golden outlook soon. As a result, the financial condition of most major housing developers in Thailand is much more robust than in the past. The development of the local bond markets and increasing domestic savings has the made the industry much less dependent on foreign funds, a significant difference from 1997.
The real demand for residential real estate stems from local residents and foreigners living or working in Thailand. The latter group will definitely be affected by the weak global economy but what about local Thai residents? The Thai domestic economy will also be adversely affected by the crisis, especially the export sector.