Total number of new supply in 1H 2017 increased 39% to 30,493 units compared to 21,927 units in 1H 2016.
On demand front, there were 27,275 condos sold in the first half of 2017, up 11.5% from the same timeframe in 2016. New launching supply in CBD, city fringe, and peripheral were accounted of 6%, 29%, and 65%, respectively.
Majority of the new developments are in lower-end to middle market segments and situated along new mass transit routes especially BTS Light Green Line Extension (Mo Chit – Kukot and Bearing – Samrong), MRT Pink Line (Kae Rai – Minburi), and SRT Dark Redd Line (Bang Sue – Rangsit).
Condominium projects launched in 1H 2017 recorded an average take-up rate of 75%, representing an increase of 1.7% compared to the first half of 2016.
However, certain projects commanding affordable pricing, attractive down-payment packages, exceptional amenities, and convenient locations were able to achieve higher sales within weeks of launch. Prime and Super Prime condominium units accounted for 89% of the total new units being launched in CBD in 1H 2017.
Eight luxury condominium projects with a total of 1,850 units were launched in 1H 2017, an increase of 6.1% from 1,744 units in 1H 2016. Demand for Prime and Super Prime condos rose slightly in the first half of 2017. Average take up rate stood at 70.1%, up by 0.8% from 1H 2016.
Highlights The Bangkok condominium sector in 1H 2017 showed positive growth adversely to recent market concern about possible oversupply situation.
Throughout 1H 2017, Bangkok condominium market maintains strong momentum from the last year in light of positive sentiment among developers, investors, and buyers. Condominium supply continued to increase, especially for those located in peripheral areas in line with urban sprawl along new mass transit routes and limitation of available prime land and high land prices in CBD.
As of 1H 2017, accumulated condominium stock in Bangkok surged to 506,662 units, increased approximately 14% from 1H 2016. Average sales price of all new supply across the city jumped to THB 154,068 per sqm, representing an increase of 6.6% compared to year 2016. We have seen active market for luxury development in Bangkok in the first half of 2017.
Eight luxury condominium projects (prime and super prime) with a total of 1,780 units were launched in 1H 2017, a strong increase from the 436 units in 2H 2016. On demand front, foreign buyers originated from Mainland China, Hong Kong, Taiwan, Singapore, and Japan shown strong interested in projects launched in CBD.
The Grade A units with price over THB 5 millions experienced upbeat demand. Over the same time, smaller and less pricey units in Bangkok, especially those located in city fringe enjoyed healthy take up rate.
In summarize, after five years of moderate price growth, Bangkok condominium market remains strong. Demand is strengthening and construction activity is rising. The locations along new mass transit routes will continue to emerge in the limelight as a result of land shortage and high land prices in city center.
In response to boost demand, we have noticed that more and more developers have come up with innovative ways to attract potential homebuyers that mostly are the new generation of condo dwellers who desire for unique lifestyle. The recent trends in innovative condo amenities including automated parking system, solar roof, sky facilities, and co-working spaces.
The Bangkok condominium market continued to expand in both inner and outer city areas in 1H 2017 with a total supply of 506,662 units, a strong increase from the 445,380 units in 1H 2016. Total number of new launches in 1H 2017 was 30,493 units, vis-à-vis 21,927 units in 1H 2016. Condominium market in CBD was fuelled by new luxury supply.
Eight luxury condominium projects with a total of 1,850 units were launched in 1H 2017, an increase of 6.1% from 1,744 units in 1H 2016. Prime and Super Prime condominium units accounted for 89% of the total new units being launched in CBD in 1H 2017. The quantum of new launches was largely confined to downtown Sukhumvit with new launches including Khun by Yoo, Siamese Exclusive Sukhumvit 42, Ideo Q Sukhumvit 36, and The Bangkok Thonglor.
Source: Knight Frank Thailand Research
The majority of new launches in 1H 2017 were in peripheral areas. This is a result of extension of mass transit routes that has gradually supported urbanization throughout Bangkok. New supply in peripheral areas was 19,712 units, representing approximately 65% of total supply launched in the first half of year. The newest condominium developments in the area including Life Ladprao, The Selected Kaset-Ngamwongwan, Niche ID Sukhumvit 113 and The Base Petchkasem.
Over the same time, new supply in city fringe accounted for 29% of overall launches in Bangkok. Popular locations for the new additions in the area are Ratchadapisek, Paholyothin, and late Sukhumvit.
Source: Knight Frank Thailand Research
Condominium projects launched in 1H 2017 recorded an average take-up rate of approximately 75%, representing an increase of 1.7% compared to 1H 2016.
However, certain projects commanding affordable pricing, attractive down-payment packages, exceptional amenities, and convenient locations were able to achieve 80%-100% sales within weeks of launch.
Average take up rate for prime and super prime condominium units stood at 70.1% in 1H 2017, up by a modest 0.8% from the same timeframe in 2016. Demand for condominiums in prime and super prime market segment is expected to continue to grow as affluent buyers still look for luxury condominium units that situated in prime areas with easy access to BTS Skytrain, MRT services, and top landmarks in the city. Meanwhile, condominiums in city fringe and peripheral areas experienced a notable demand growth in 1H 2017 in light of the extension of mass transit routes. Take up rate for those projects in city fringe and peripheral was 69.7% and 77.1%, respectively.
In summarize, demand across the market continues to be driven upwards by domestic homebuyers. Nevertheless, the market experienced increasing demand from foreign buyers especially those originated from regional neighbors such as Mainland China, Hong Kong, Taiwan, Japan, and Singapore.
Source: Knight Frank Thailand Research
Super luxury condominium projects in CBD achieved record breaking average selling prices in 1H 2017 of THB 401,000 per sqm. The most notable was the freehold 77 units ‘98 Wireless’ by Sansiri Plc., located on Wireless road in prime CBD. As a result, the average selling prices of all grades condominiums in CBD includes early Sukhumvit stood at THB 254,949 per sqm, an increase of 6.6% compared to 2016.
The newly-launched hi-end condominiums in city fringe performed well in terms of number of sales. Average take up rate in 1H 2017 registered at 69.7%. Average selling prices of those condominiums in city fringe registered at THB 131,136 per sqm, increasing by 5% from 2016. Over the same period, average selling prices of condominiums in peripheral rose slightly to THB 76,118 per sqm, up from THB 74,998 per sqm in 2016.
Source: Knight Frank Thailand Research
Looking forward, the number of new supply launched in Bangkok is expected to increase continuously while big name developers will be key players in the market. The average price of luxury condominium units in CBD is anticipated to continue to grow throughout 2017 in line with rising costs and increasing demand for high quality projects with finest specifications in prime areas. Capital values of condominiums in CBD are foreseen to increase further in the future on the back of soaring land prices which in turn will push up the average unit selling price. Driven by rising average selling prices of newly launched projects in CBD, resale units with good specifications in well maintained and managed buildings will gain more prices when change hands.
Apart from CBD locations, areas in city fringe and peripheral will continue to show buoyant launch and healthy take up rate in the wake of the extension of mass transit routes that continue to open up development opportunities for both domestic and international players. Active zones include those in the radius of BTS Light Green Line Extension (Mo Chit – Kukot and Bearing – Samrong), MRT Blue Line Extension (Charansanitwong – Petchkasem), MRT Pink Line (Kae Rai – Minburi), MRT Orange Line (Rama 9 – Ramkamhaeng), and SRT Dark Redd Line (Bang Sue – Rangsit). Demand for condominiums in Taopoon – Bangsue area is foreseen to improve in light of the completion of the connections between MRT Blue Line extension Bangsue – Taopoon and MRT Purple Line. However, developers should be cautious in starting new projects in lower-end to middle market segment along new mass transit routes in suburbs to cushion against the risk of oversupply.
In the short term, average selling price for future supply in peripheral areas is expected to be stable in line with land abundance and affordable land prices. Smaller units or units of below THB 3 millions will continue to be popular as cash tight buyers with existing housing loans reduce their budgets.
Whilst demand will continue to be mainly driven by domestic homebuyers, we expected an increasing number of Asian investors purchasing CBD condominiums for capital gain and rental investments amid progressive cooling measures in their own home countries, particularly among regional neighbors from China, Hong Kong and Singapore. Notably, the mainland Chinese buyers have grown significantly in numbers from last few years. This is foreseen to go up further as property market restrain in China could prompt more mainland Chinese buyers to turn their attention overseas.
Appendix: Condominium Location
City Area: This is the Central Business District area as well as the area that surrounds it. It is popular for expatriates, tourists and affluent Thais for both for shopping and residence. It also includes areas along the Chao Phraya River on Charoen Krung and Rama III roads. The City Area can be divided into sub-areas as follows:
Central Business District (CBD): This is the area that encompasses Sathorn Road, Silom Road and Wireless Road CBD corridors. It is an established business location with quick access to Sukhumvit, Rama 3 and the riverside areas.
Sukhumvit: This is the section of Sukhumvit Road between Soi 1 to 63 (North side) and Soi 2 to 42 (South side) and the entirety of Rama I and Ploenchit roads. The area is popular with expatriates, tourists and affluent Thais.
Rama III and the Riverside: This is the area that stretches along Charoen Krung Road of the Chao Phraya River southward just past the Sathorn Bridge, and to the north of Sipraya Road as well as the area along both side of Narathiwas Road and portions of Charoen Nakhon Road immediately next to Taksin Bridge.
City Fringe Area: The area is located on the edge of the City Area, and provides easy access to the City Area. This area is an alternative for condominium buyers due to the convenient access to many shopping and transportation centres. The City Fringe Area can be divided into the following sub-areas:
Ratchada-Ladprao Area: This is the area with close proximity to the Blue Line MRT stations covering both side of Ratchadapisek Road and the beginning of Ladprao Road to the West.
Phahonyothin Area: This is the up and coming area that offers a convenient access to many academic institutions and government agencies. The area covers Phahonyothin Road between Soi 1 to 13, and Soi 2 to 14.
Late-Sukhumvit Area: This is also another up and coming area that is currently very popular with many young local and foreign professionals and major condominium developers. It covers Sukhumvit Soi 63 to 81 and 42 to 50.
Bangkok Peripheral Area: The three major areas under this classification are:
o Outer Sukhumvit: This is the section of Sukhumvit Road on both sides after Sukhumvit Soi 81, stretching to the Bangna intersection.
o Thonburi Area: This is the area covered by the new BTS extension on the Silom (Light Green) Line from Saphan Taksin to Bang Wa.
o Other Areas: These areas are outside of the areas already mentioned. Most of the remaining condominium areas are scattered across the city, including Srinakarin, Chaengwattana, Kaset-Navamin, Petchakasem, Samutprakarn Sukhumvit, etc.
Appendix: Condominium Classification
Super Prime and Prime:
o The location is in the City Area.
o The selling price of the unit must be at least THB 170,000 per square metre.
o The majority of the units in the project must be over 50 square metres.
o The common facilities and unit decoration must be of very high standard or iconic.
o The location is in the City or City Fringe Area.
o The selling price of the unit must be within the range of THB 120,000 – 169,999 per square metre.
o The common facilities must be of high standard.
o Any location in Bangkok
o The selling price of the unit must be within the range of THB 80,000 – 119,999 per square metre.
o Any other condominium projects that do not qualify for the classification mentioned earlier.
Asia Pacific to outperform other regions in 2020 for real estate investment
Investment in Asia Pacific real estate has reached US$125 billion in the first three quarters of 2019, up 10 per cent year-on-year, and is set for another strong year in 2020, says JLL.
According to the real estate consultancy, foreign investments into Asia Pacific are at a decade-high, making up 35 per cent of total volumes, mostly driven by private equity funds and large-scale transactions.(more…)
Asia Pacific REITs raise a record amount of US$14 billion in 2019
REITs in APAC have raised over US$14 billion so far in 2019, surpassing the previous record of US$13.8 billion in 2013, according to JLL data.
Land and Property Tax Forces Site Owners to Consider Options
The new Land and Property Tax, which will be effective from January 2020 onward, is another challenge for the Thai property market.
Thailand among top five countries for salary hikes
Thailand is among the top five economies in the world to see real salary increases and is likely to see...
Thailand Ecommerce Market: Shooting For Success
At present, the Thai ecommerce market is valued at USD 3.5 billion. According to a Google Temasek study, Thailand’s e-commerce...
Aspire Set to Become First SME Neobank in Southeast Asia with US$32.5 Million Raise
The recent financing has been led by Mass-Mutual Ventures Southeast Asia with participation from Silicon Valley’s Arc Labs and existing...