A clear split is developing in Bangkok’s condominium market between the downtown market and the midtown / suburban market, according to new research from CBRE published yesterday.
The Bangkok Overall Market View Q3 2013 report highlighted different market dynamics, sizes and quality emerging from the diverse sectors.
The downtown market consists of projects at higher prices while the midtown/suburban market is a mainly a mass market made up of one-bedroom units. There were almost 10,000 new condominium units completed in the downtown and midtown markets this quarter, with only approximately 20 percent of the units located in the downtown area.
The illustration (above) highlights how the midtown / suburban markets will see the vast majority of new launches in the coming years.
Total midtown and downtown supply is now approximately 380,000 units where the majority of supply is in the midtown area and the market for downtown condominiums is now a low volume high value market.
The number of new launches in the downtown area has increased by approximately 22 percent on last quarter.
Many of the newly launched projects in the downtown area are located in the less prime locations in the secondary locations where there’s an overlap between downtown and midtown market.
Marque Sukhumvit 39 was the only super luxury project launched in Q3 2013 located next to Sukhumvit main road, and it achieved prices higher than THB250,000 per sqm. This has surpassed the previous record-breaking price for the Sukhumvit area which was achieved by the XXXIX by Sansiri launched at the end of 2012.
Much of the built but unsold inventory in the downtown area has now been cleared and prices are rising for the best quality downtown completed projects and for the best located new downtown launches. Buyers looking for luxury condominiums recognize they need to pay top prices to have the best quality in the best locations.
CBRE noted that about 80 percent of buyers are still Thai, but the number of foreign purchasers has increased with growth in the number of Asian buyers from Hong Kong, Singapore, and Taiwan.
The report said: “We have concerns about the midtown and suburban condominium market. The Bank of Thailand (BOT) has warned banks to be more cautious in their lending to this sector but as yet has not lowered the loan to value requirements. The BOT is looking more closely at loan to income ratios and have inspected the property loan books of all commercial banks.”
There will be a record level of midtown and suburban condominium completions in the next two years and developers will be competing with speculators who wish to resell before completion.
Taking into account the level of new supply, level of current consumer debt, expectations of more cautious lending by banks, rising construction costs and a slower economy CBRE said it feels that in the next 12 months will be more challenging in the midtown and suburban condominium market.
Andrew Batt,
International Group Editor of PropertyGuru Group, wrote this story. To
contact him about this or other stories email andrew@propertyguru.com.sg
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