The condominium sector in Bangkok’s central business district saw strong launch activity in Q3, according to the latest research report from real estate agency DTZ.
The three months ending September 2013 saw approximately 2,440 units being launched versus the 1,600 units which made their debut during the previous quarter.
Despite concerns of rising household debt in the overall economy, local property developers continued to show modest confidence in homebuyer appetite by launching new condominiums before the year-end festivities, usually considered a quieter period for house-buying activity.
The centre of the Thai capital, comprising Chidlom, Ploenchit, Rajdamri, Rama 1, Samyan and Ratchatewi, was especially active with four projects that accounted for 71 percent of total launches in the quarter.
Listed residential property developers were the most active – not only in the CBD areas but also in the fringe and suburban areas of Bangkok.
In response to rising concerns over household debt and difficulty in sourcing for loans, the majority of new launches in Q3 were in the ‘Grade A’ segment. This was in contrast to the previous quarter which saw most launches in the luxury and super luxury segments. In line with this activity average launch prices were slightly lower during the third quarter at THB140,000 per sqm compared to THB152,000 per sqm in Q2.
DTZ also noted that take-up rates for CBD condominium projects that were launched during Q3 were recorded at an average of 58 percent.
Despite a dimmer outlook in the overall economy, the condominium sector managed to maintain a healthy status as certain projects were still able to close project sales within a matter of days, reflecting the sustained demand for reasonably priced condominiums and those that are located close to mass transit stations.
Amid the upbeat launch and purchasing activity, DTZ expects that banks will continue to heed caution by monitoring mortgage approvals and interest rate movements.
Capital values for CBD resale condominiums edged up slightly in Q3 by 0.7 percent quarter-on-quarter and by 3 percent year-on-year to reach an average of THB87,100 per sqm.
Condominium resale prices grew at a slightly faster pace compared to launch prices during the quarter as the former are viewed by investors as value for money properties with further capital appreciation opportunities.
As new launch prices continue to rise in the near to medium term driven by rising costs, DTZ expects domestic buyers to seek purchasing opportunities in fringe and suburban residential projects which are more affordable compared to CBD projects.
At the same time, it also expects an increase in foreign buyers investing in CBD properties, particularly in view of the increasing number of projects that are being taken abroad for overseas launches.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote
this story. To contact him about this or other stories email andrew@propertyguru.com.sg