Downtown Bangkok condo prices up 11%

Downtown Bangkok condominium prices have risen more than 11 percent year-on-year according to new research covering Q3 2017 from real estate firm CBRE.

The overall Bangkok condominium market remained generally slow, the agency reported, however, the downtown area performed well due to healthy demand.

The midtown and suburban Bangkok condominium markets still faced challenges, it added.

CBRE said a total of 4,017 units were launched in the downtown Bangkok area during the three months ending September 2017 compared with 1,041 units launched in the same time during 2016, a significant increase of 53 percent year-on-year.

However, the total number of newly launched units in 2017, as of Q3, was 7,870, close to the 8,154 units launched during the whole of 2016.

“We do not expect a large number of new launches in the last quarter of this year,” the report said.

Buyers in the downtown Bangkok property market remained selective and cautious, which slowed overall sales rates and resulted in mixed sales performances.

Only projects in good or new locations with the right pricing, and that matched demand in the area, did better than average.

“We are not worried about having an oversupply in the downtown area,” CBRE said.

As of Q3 2017, there were 30,480 under-construction units. Some 77.2 percent of this future supply has already been sold.

Based on reports from publicly-listed Thailand property developers and CBRE surveys, the real estate agency believed there are only a small number of built-but-unsold units in the downtown area.

During Q3 three super-luxury projects were launched, two being leasehold projects developed by Siam Sindhorn: Sindhorn Tonson (59 units) and Sindhorn Langsuan (20 units).

The two projects have average asking prices of THB 300,000 per sqm and THB 330,000 per sqm respectively, for a 30-year lease.

The only freehold super-luxury project launched in the three-months was Banyan Tree Residences Riverside Bangkok (133 units), developed by Nirvana Daii. The project in the Riverside area has an average asking price of THB 330,000 per sqm.

CBRE said its outlook for sales is that they will be slower, with buyers being more selective, especially for the most highly-priced products.

Sales performance will be mixed, but CBRE does not believe that prices in the downtown area will drop, except in a few completed projects with high unsold inventory.

The increase in land prices means new projects will have to charge higher prices than those of previously launched developments.

The midtown and suburban Bangkok property markets still faced weak demand due to a weak economy, hence, together with rising inventory, it is going to take time for the market to absorb the oversupply of units in some midtown suburban areas, according to the real estate agency.

The total number of completed condominiums in the midtown and suburban areas increased to 473,490 units, a rise of 10.7 percent year-on-year.

Many midtown and suburban property developers focused more on locations closer to the downtown Bangkok area with the aim of achieving higher prices.

Developers decreased unit sizes so lump sum prices did not rise, CBRE noted.

Even though banks have eased mortgage lending criteria, CBRE thinks only a few potential purchasers can afford the much higher prices, because disposable incomes have not been rising and the level of consumer debt remains high.

“We will have to wait and see how buyers will react to the new, more expensive products in the midtown and suburban areas, it said.

Some developers continued to focus on overseas sales for downtown, midtown and suburban property projects.
CBRE said that it remains to be seen whether foreign demand will be sustained, especially for midtown and suburban projects.