Bangkok Condo Prices Rise Q1
Rising land prices reflected in notable increase in units priced between 100,000 and 150,000 bt/sq m
The first quarter of 2018 is behind us, and the positive economic trend appears to be continuing with exports, private and government investment as well as tourism meeting expectations. Most economists and research houses have been revising their predictions upward, with gross domestic product growth forecasts for the year ranging between 4% and 4.5%, compared with 3.9% last year.
The property market has also witnessed a slight upturn, especially in the condominium segment, as developers are growing more confident in the country's longer-term economic outlook and consumer purchasing power is improving. Still, developers are not in a big rush as they are awaiting hard data on first-quarter performance and the outlook for subsequent quarters.
New condominium launches in Bangkok in the first quarter of 2018 totalled 14,600 units, around 5% higher than in the previous quarter but nearly 35% higher than in the first quarter of 2017. In keeping with the prevailing trend of the last few years, 66% of all new units were located along existing mass-transit lines.
While developers know they also need to have a presence along mass-transit lines under construction or in the pipeline, many believe projects near lines that are already operating will enjoy a faster take-up. The area from the Rama IX intersection to the Huai Khwang MRT station was the busiest in the first quarter of 2018, with around 4,400 new condo units coming on the market.
In recent years many developers have also been focusing more on suburban Bangkok areas beyond the reach of existing mass transit, where land prices are more affordable. As a result, condominiums with an average selling price of 50,000 to 100,000 baht per square metre have had the highest share of the market since 2014. But since new mass-transit lines began to take concrete shape in 2016, there has been a noteworthy pickup in the number of units priced between 100,000 and 150,000 baht per sq m along lines under construction.
There has been little movement in other price ranges. Units priced below 50,000 baht per sq m are becoming a thing of the past as land prices rise, while those priced above 200,000 baht per sq m are seeing lower growth rates as the number of prospective purchasers is limited.
The average take-up rate of new condominium units launched in the first quarter of 2018 was approximately 55%, similar to the previous quarter. This is a bit below the long-term trend and reflects the fact that many prospective buyers are still not completely confident in the long-term economic outlook and are reluctant to take on large long-term debts.
The Bangkok condominium market is still in expansion mode, especially along new transit lines, with the focus on units priced below 5 million baht. But some developers are still looking to buy plots along existing mass-transit lines, even though costs will be high, as they want to maintain a share in the high-end market.
Thai buyers' purchasing power shows a positive trend compared with last year, but interest rates might increase later in the year which will affect sentiment. Foreign buyer interest is also increasing, especially among Chinese buyers, a group that more developers are now trying to attract.