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[ 2019-02-23 ]

Condo Market still Strong in Bangkok says Plus Property Thailand

Increased interest for new condominiums from residents as well as from investors has continued to stimulate growth of the condominium market.   This was announced by Plus Property Co. Ltd, a full-service profession property and facility management agency.

Figures going back four years shows that there has been an almost 80 percent demand in the inner Bangkok areas such as Chit Lom and Phloen with only about a 20 percent growth in supply

The demand in the Sukhumvit area increased around 50 percent with a supply growth of 30 percent over the same period.   In the Phya Thai-Ratchathewi area there was an astounding 570 percent demand and a 240 percent supply growth.

In resort cities such as Phuket and Hua Hin the condo market progress is pushed along by public infrastructure development.   Offering the advantages of lower prices and higher tangibility than projects under construction, the resale condominium market is foreseen to become increasingly stimulated in early 2019 as buyers rush their condominium purchase before new mortgage regulations take effect, according to a recent Plus Property press release.

Findings from Plus’s research and strategies development division show that the residential market continues to expand according to Anukul Ratpitaksanti, the company’s managing director.   Areas serviced by the electric train and in central business districts, where people generally prefer to live, are especially affected.  

Several new areas have increased due to the expansion and the increased coverage of mass transit. Condominium residences are realizing impressive growth, which has prompted a rise in the price of land along the mass-transit lines and their new routes.   Which in turn has increased the price of new condominiums.

Career hubs, community malls and other buildings add to increased demand for condominiums.   These in turn lead the area to become a commercial center.

Over the last four year period between 2015 and 2018 Plus’s compilation of data divulged that the appeal for the Sukhumvit location grew by about 50 percent, while supply only grew by 30 percent.   Demand for the Phya Thai-Ratchathewi area grew by an astounding 570 percent, while supply only increased by 240 percent.   The low number of available projects and the lack of new project launches resulted in the limited supply. Demand for the Phloen Chit-Chit Lom zone grew by about 80 percent however supplies grew only 20 percent.   This situation means that the demand could rise exponentially whenever a new project goes on sale.

These figures show how demand has undoubtedly outgrown supply.   The limited space available for developing new condominium projects in Bangkok’s central business districts and inner zone has resulted in this imbalance. Development of new projects was difficult despite a high demand for potential buyers. Because of this, resale condominium units at already-completed projects are feeling very good growth and those who want to live at downtown locations are benefiting from this.

A condo unit at a new project in the Phya Thai, Asok and Sukhumvit zones was price at almost 10 percent higher than one at a resale project.   Resale prices remain lofty within these zones and there is less of a difference between the price at a new and resale projects.   This is not like the gap between prices at projects located in Bangkok’s outer areas.

The popular return on investment is a contributing factor for the perpetual popularity of inner Bangkok condominiums.   Capital gain and rental yield are also high for inner Bangkok.   Projects in Sukhumvit and outer Sukhumvit areas are projecting returns that are higher than the average return, which is about 10 percent per year, and has a tendency to increase continually.   However, there are projects that recently launched within the past two to three years that have projected less capital gain.

With the prices of new projects continuing to increase it can be reasoned that in order to profit from a price difference an investor may need to hold the property for at least three years. This and accepting a rental yield of 4-6 percent.   Overall return will ultimately increase because of the forecasted tendency for an ever-increasing price level.

Important factors driving the growth of the condominium market are the expansion of urban areas and the state sector’s propagation of infrastructure and transportation projects towards major tourism cities.

Particularly in the Phuket zone this is true, where projects exist for the development of Phuket Airport’s third phase, the transportation infrastructure and the Phuket Smart City. The future growth of Phuket City will accommodate these developments. The prices of condominiums in Phuket have been rising over the previous three years based on these developments, with the rise at 12 percent on average.

Hua Hin real estate has also been rising overall. Transpiration links with Bangkok such as high-speed rail and motorway will greatly benefit this zone.   The area’s existing livability factor coupled with these transport links will drive up the demand for real estate in Hua Hin.

The price of land in the 2016-2019 accounting cycle increased by almost 30 percent from 2012-2015 cycle. At the same time prices in the real market have also continued to rise over the past five to six years. Reselling a condo unit has resulted in a return as high as 60 percent, while return from rent still yielded a hearty 4-5 percent per year. Therefore, condominiums in holiday hotspots remain an equally appealing choice.

“Our prediction is for completed condominium projects to become revitalized through the resale scene in early 2019, before the Bank of Thailand’s LTV (loan-to-value) reduction measure takes effect in April. The resale units present a better investment choice because the layout of the condominium and the condition of the room can be promptly inspected. As well, the units are ready for a move-in as well as ready to earn income.

“Also, developers are currently releasing special promotions, and this presents a good opportunity for people who want to purchase property before the LTV reduction measure comes into force, in order to benefit from prices that will increase in the future”, said Anukul.