Not only has the split between downtown and midtown condominium markets deepened, a smaller volume of new products in the heart of the city has turned it into a luxury zone that only the well-heeled would dare to step in, James Pitchon, executive director of CBRE last week.
There is an increasing scarcity of prime land and the plots that are left are very highly priced with those in Lumpini area selling at way over 200,000 baht per square meter. Even in Sukhumvit it is very difficult for anyone to sell good plots at less 150,000 baht a square meter.
“If you were describing in items of cars, the downtown market is becoming very much a BWM or Mercedes market.”
Unlike the midmarket segment which is dominated by the strong demand for one-bedroom units, the limited number people who are buying downtown condos usually want a larger home.
There is still demand but the new projects will generally have to be quite exceptional in terms of quality and location in order to sell.”
“We think that there will be a limited number of new launches and they will be at the higher end of the market because it is increasingly difficult for developers who want to develop one-bedrooms to buy sites at prices that enable them to sell condominium at affordable level.”
While the majority of the condominium developers are now focusing on the one-bedroom mass market, Mr. Pitchon has noticed that this too has changed with end-users now dominating it and there being less speculative and rental activity.
Of the issues that end-users focus on it is affordability which is non-negotiable with the other two, location and size, being what they compromise on.
“So you have got one fixed – affordability – and two variables – location and size. So the further away you move, you have got the purple line, you can play 50,000 baht a square meter so 1.5 million baht for 35 square meters.”
However, 35 square meters on Ratchada, it’s 100,000 baht so it’s 3.5 million baht, for many people that is beyond their budget.”
“So prices have gone up and my feeling is while there is some growth in the affordability level it is pretty much fixed and not moving quickly.”
“In an ideal world, everybody wants to be next to a skytrain station so the compromise is can you be further away, so either it’s a low-rise block inside a soi or just further away on the main road.”
“Some areas can exit without mass transit because it’s densely populated so there has been activity in Pinklao where there is currently no mass transit system.”
The perplexing issue is how small could a condominium get and Mr. Pitchon has discovered that the legal limit is 20 square meters with 22 square meters being the smallest his company has come across.
Bangkok falls 19 places to 49th most expensive location worldwide
Locations reliant on international tourism have seen their rental markets hit especially hard during the pandemic, resulting in some major drops in the rankings. Bangkok has fallen 19 places to 49th, while Hanoi saw a similar drop of 12 places to 81st.
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