By Andrew Batt:
Prices of condominiums in central Bangkok are predicted to rise sharply as a result of limited supply, high demand and a lack of new units coming to market.
Risinee Sarikaputra, Associate Director of Research and Valuation Department, Knight Frank Chartered (Thailand) revealed the supply of city condominiums launched since last year has been relatively low due to scarcity of land in the city where demand is strong.
During the first half of 2012 around 1,898 units were launched in Bangkok. In the second half it’s estimated that around 1,500 units will be launched, and this imbalance will push the selling prices of condominium in the city area up sharply.
Knight Frank noted that prices of new city condominiums are currently more than THB 170,000 per square metre. In the city centre, especially around the Lumpini area, prices have skyrocketed with freehold condominiums priced at more than THB 220,000 per square metre and leasehold condominiums priced at in excess of THB 170,000 per square metre. The latter is equal to freehold condominium prices along Sukhumvit Road.
Demand for Bangkok condominiums slowed during 2011. Knight Frank research indicated that the total take up was 20,560 units for the whole of 2011. During the first half of 2012, demand was about 16,810 units, an increase of 12.8 percent compared to the same period last year. The majority of demand during the first half of this year was for condominiums located in Bangkok’s peripheral areas, especially the area in the northern parts of the city such as Chaengwattana.
The selling price in the Bangkok’s peripheral areas increased slightly, up 0.8 percent from 2H 2011 due to the abundance of supply in the area. Average selling prices of condominiums in the city fringe and peripheral areas increased by 4 percent from last year. The average selling price of condominiums in the City area was THB 145,232 per square metre; and in the city fringe area it was THB 98,199 per square metre. The selling price of condominiums in Bangkok’s peripheral areas was THB 51,415 per square metre during the first half of 2012.
Risinee forecasted that the trend of competition in the condominium market during the second half of the year is expected to be concentrated along the main suburban BTS train extension lines. As urban land prices rise, developers have turned their attentions to the outskirts of the city, creating new markets in three main areas: Chaengwattana-Ngamwongwan, Onnut Bearing, and Thonburi. Neighbourhoods along the BTS extension are seeing many large scale projects cropping up, creating heated competition.
In Onnut Bearing, projects are concentrated around Onnut, Udomsuk, and Bangna. As for the Taksin-Wong Wian Yai BTS line, the extensions to Pho Nimit and Ratchada-Ratchapruek opening late this year have attracted the return of large developments to the market.
During the second half of this year, there will be more new condominium units in Bangkok’s peripheral area due to the availability of land. With a rapid increase of supply that surpasses demand, it is forecasted that the selling price of condominiums will be stagnant or decrease slightly for some projects.
As a result, many developers are attempting to acquire pieces of land in the city area in order to launch in-demand city condominiums for Thai buyers, who are mostly purchasing condos for both their personal dwellings as well as for investment; and foreigners from other Asian countries, especially Singaporeans, Hong Kong Chinese, and mainland Chinese.
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