From just 2,600 completed units n the downtown Bangkok condo market in 1988, there are now some 140,000 units, and also more than 630,000 throughout the city.
To mark 30 years in Bangkok, real estate firm CBRE has revealed some interesting data about he Bangkok condo market, and how it has been transformed in just 30 years.
Aliwassa Pathnadabutr, the Managing Director of CBRE Thailand, said that when he first joined the company, which was called Richard Ellis in 1988, it was possible to buy a condominium unit off-plan in downtown Bangkok for between THB 20,000 per sqm and THB 25,000 per sqm.
She said that Bangkok condo purchasers in 1988 got a bare concrete shell with a very basic bathroom with no wall, floor or ceiling finishes, no fitted kitchen, air conditioning, lighting or electrical outlets provided by the developer.
Today, she said that most Bangkok condos are sold fully-fitted basis and buyers only need to provide loose furniture.
Prices for new buildings have risen by more than 1,000 percent with many new condominiums selling for over THB 300,000 per square metre in prime locations, she said.
In the late 1980’s, the most expensive condominium project was Somkid Gardens, behind Central Chidlom, where you could buy an off-plan unit for around THB 35,000 per sqm
Today the most expensive Bangkok condo development is Sansiri’s 98 Wireless where it has been reported that a unit was sold for more than THB 700,000 per sqm.
The late 1980’s and early 1990’s were Thailand’s “Asian Tiger” years where more than 90,000 condominium units were built in Bangkok.
The Bangkok condo market was highly speculative with people trading off-plan contracts as if they were shares, with little thought about design, specification or who the end-user target market was.
The result was that some of the developments from that period were quite poor quality.
The speculative bubble started to cool in 1994 and finally burst in 1997 with the Asian Financial Crisis.
The market came to a halt with construction stopping on half-built projects and no sales.
Prices did not immediately fall as the foreclosure process was so inefficient and it was not until the early 2,000’s that unsold inventory was cleared and unfinished projects started to be completed.
The first new launches did not take place until 2003.
Since then there has been a big jump in demand, especially in the midtown areas, as young people now leave home before marriage and can afford to buy their own home.
It is this social change and increase in disposable income that has fueled the mainly one-bedroom midtown Bangkok condo market.
The Bangkok condo market has one feature that makes it different to many other property markets around the world; the relatively low level of secondary sales.
Most Thai buyers still prefer new properties bought off-plan or on completion.
There are speculative buyers who purchase with intention of reselling before completion of construction, but a relatively low level of re-sales after completion.
The gap in pricing between new and old condominiums is growing and only few buildings more than five years old have prices that are close to the prices of new projects in the same location.
In the city-state of Singapore, owners of some older buildings have agreed to sell the whole block in a collective sale for redevelopment where the land value now exceeds the total price of all the units, but that has not happened in Bangkok, partly because the Thai condominium law requires 100 percent agreement of all co-owners to revoke the condominium.
“I have seen a huge improvement in design, specification and build quality over the last 30 years with developers clearly focused on end-user requirements,” said Aliwassa.
“Looking forward, the Bangkok condo market will fluctuate depending on the economic climate, and we may see a more active interest in older buildings as purchasers start to see the value in renovation, but there will, as with all cities, still be demand for new buildings.”