Highlights
– Condominium rental market in CBD still progresses with some demand despite great supplies and high competition.
– Renters still favour small-sized units (studio and 1-bedroom) in new projects located near public transits or business hubs.
– Risky locations to watch out: Rattanathibet and Tiwanon – highly competitive market, low absorption rate, low purchasing power forcing cuts in purchasing price and rental price.
[Special Scoop] At present, Bangkok’s overall real estate market and rental condominium market are in a situation which everyone must keep an eye on. Despite the market’s positive sign in the second half of this year, there are still some problems which are slowing down the market growth: household debt and home loan rejection. These problems, however, are found mostly in condominiums located in Bangkok’s peripheral areas, prompting investors to look for a long-term investment by rents in condominiums in CBD instead, which still grows with some demand in spite of a highly competitive market. Nevertheless, Bangkok’s rental condominium market’s unreliability still must be watched closely.
Condominium rental market’s situation in 2017
Despite a stagnant real estate market in the first half of this year due to global economic slowdown and domestic problem of high household debts which prompted banks to impose tightened lending rules, the situation in the second half seemingly becomes active once again especially condominium rental market in CBD, due to continuous growth of supplies and demand in the areas.
It is found that small-sized condominium units are more in demand than large-sized units, possibly due to the lower rent price and the fact that most renters are individual salary earners rather than families. JLL, an international real estate consultant and service provider, found that small-sized unit renters favour new projects over ones established for more than five years. On the contrary, family-like renters favour large-sized units in old projects due to greater usable area. In general, CBD condominiums located near public transits or business hubs give the rent prices between THB 50,000-70,000 per month.
Units in new projects in CBD can still fetch a high rent price
Renters favour small-sized units in new projects
The favouritism of small-sized units among condominium renters had encouraged developers to shift their focuses on building a multitude of studios and 1-bedrooms to support investors, who usually have savings to negate the problem of home loan rejection. In addition, demand for medium- and high-end projects are less affected by the country’s economic performance compared to economical projects; together with the prosperity growing in their locations, medium- and high-end projects unaffected rising prices also take their rent prices higher, however, this only applies to new projects. Comparing to old projects with lifetimes between 5-9 years, rent prices in new projects have grown higher by 10-20%, and up to 30-40% compared to those established for over 10 years. Overall, people tend to choose new projects over old ones due to greater facilities and innovations.
Dropping prices of condominiums in Bangkok’s peripheral areas
The expansion of Bangkok’s mass transit system into peripheral areas has prompted many developers to acquire land plots in those areas – while the prices are still low – to launch condominium projects in both low-rise and high-rise. This creates excessive condominium supplies as the demand in these areas are still scarce – especially those locations far away from the inner city. Knight Frank Charter (Thailand) found that Rattanathibet and Tiwanon are the zones to be worry about: there are a lot of unit surpluses, the competition is very high, and the low absorption rate is forcing cuts in both purchasing price and rental price in each project.
Future mass transit lines are locations to keep an eye on for real estate activities
While Rattanathibet and Tiwanon seem fruitless at the moment, some of the Bangkok’s peripheral areas look opportunistic. Knight Frank reveals that future mass transit zones: North Green Line (Mochit – Kukot), Yellow Line, and Pink Line, still have low supplies of condominiums – hence, low competition and sufficient purchasing and rental demands. In addition, Rama 3 is one of the appealing zones regarding its view of Chao Phraya River and proximity to reach Silom and Sathon CBD; rent price in Rama 3 could be raised up to THB 20,000 per month for a 1-bedroom unit.
It is important to know who your target renter is whether you are an expert or inexperienced investor. If your target are salary earners or foreign expats, condominiums in CBD with proximity to a public transit would be an ideal choice; this zone shows no sign of slowdown and gives you a substantial rent price, unlike Bangkok’s peripheral areas which are quite unreliable at the moment.
The content is written by Araya Siripyak, a content writer at DDproperty.com. For more information, please contact araya@ddproperty.com
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