Rail expansion, modern lifestyle boost strengths of condo market in Bangkok
Overview of Bangkok’s condominium market remains bright.
Given the attributes of the rail expansion and the lifestyle of modern people who increasingly desire convenience that in 2017, there were 62,751 new units entering the market, an increase from the previous year of 19 per cent, according to a report by Knight Frank Thailand Research,
The average annual total sales rate was around 76 per cent, reflecting growth from the 74 per cent seen in 2016. The most popular locations continue to be around the Light Green Line and the Blue Line.
As for the CBD, Sukhumvit remains the most popular area, with around 11,000 new units coming into the market; this was followed by Wireless Road, Silom and Sathorn with 2,300 units, and Rama 4 with 817 units.
When scrutinising sales of each area in 2017, it was found that the CBD and surrounding areas experienced average sales rates of 78 per cent and 71 per cent, respectively, while new suburban projects averaged an annual sales rate of approximately 80 per cent.
This serves as a good indicator of consumer confidence in the market. The selling price per square metre rose in all segments, particularly the CBD, which has limited plots of land suitable for the development of new projects.
As a result, land prices soared, which is reflected in the sale prices. New projects in the CBD commanded an average sales price of Bt248,267 per square metre, while the area around the CBD was priced at approximately Bt131,521 per square metre, and new projects in the suburbs was at Bt79,871 per square metre, increasing from 2016 by 8.6 per cent, 1.2 per cent and 6.5 per cent respectively, the research said.
For the first quarter of this year, there were 12,563 new condominiums entering the market; new units enjoyed sales of about 55 per cent.
Over a half of them were launched in March 2018. The average selling price per square metre in the CBD and surrounding areas clearly contracted from Q1 of last year.
This is because projects launched this quarter are located in less prominent areas, with lower grade specifications.
However, the average sales price of a new unit in the suburbs grew to a record high at Bt110,353 per square metre in the first quarter of this year, up 61 per cent compared to the same period of last year and up 38 per cent compared to the entire 2017.
This was due to the scarcity of land in the city, coupled with land prices that are steadily rising. Many operators are also increasingly turning their attention towards the periphery. In this quarter, one project had an offering price of more than Bt110,000 per square metre.
As there were 6 projects launched in the suburbs, the average selling price per square metre in this area was pushed higher compared to past years.
This year, the market outlook of the suburban areas and around the CBD is that both locales have opportunities for growth; this is in terms of product, price and consumer response, especially for projects near the mass transit train lines or no more than 1 kilometre from the lines. Such areas should continue to receive heightened attention from large and mid scale property developers.
From Knight Frank Thailand Research, it was found that there are several projects from leading developers that will be gradually launched in the CBD in the remaining quarters of 2018. It is worth watching the new projects’ pricing, seeing whether the average prices per square metre of condominiums in the CBD would adjust lower or higher than in 2017, the research said.