Prime condominiums in the Thai capital have a significant competitive advantage over their counterparts in Asia-Pacific, according to Knight Frank Thailand.
Frank Khan, Executive Director, Head of Residential, Knight Frank Thailand, (pictured) said there are no signs of bubbles in the Bangkok real estate market,
He explained that the Bangkok condominium market is divided into four segments, including:
Condominiums in the central business district (CBD) area, which encompass Ploenchit and Sathorn Roads.
There will be no bubbles because there is little land available for the development of high-rise buildings. Existing land is also very expensive. These condominiums always go with premium quality and high price. There is always demand but limited supply, and as such investments in this segment are justified.
Condominiums in Sukhumvit sois 3 to 69 and the Prakanong area.
Condominiums in this area are also outstanding for investment, said Khan, especially between sois 3 to 55 and with one- to two- bedrooms. Investors can get rental yields of up to 5 to 6 percent.
Condominiums in the fringe area such as Ladprao, Ratchada and Rama 9.
Condos in this segment have good potential because of their easy access to mass transportation infrastructure, such as the BTS and MRT. The available land price is not that high, so there will be good new supply in the future. The resale market in this area is also good for projects located less than 200 metres from the mass transit systems.
Condominiums in the peripheral area.
For this segment, developers should be conscious about the condominium grade because overall demand is not that healthy. Buyers of condos in this area are price conscious so developers tend to make the unit sizes smaller and the prices lower.
Khan compared the Bangkok premium condominium market with that of other Asia-Pacific countries. He said that local condominiums can compete with their counterparts in places such as Hong Kong, Shanghai, and Singapore.
With comparable quality and specifications at a lower price, Bangkok premium condos, such as the Sukhothai Residences and St. Regis Residences, offer better value for money.
Developers of premium condominiums should continue to focus on high-end standards in their specifications, along with value-adding designs such as a larger master bedroom, and more generous living and kitchen areas. Premium condominiums are popular among foreign buyers, especially those from Hong Kong, London, Australia, France, India and Russia.
Given the competitiveness of local premium condos and the steady demand from foreign buyers, Knight Frank Thailand plans to expand its international exhibition of premium Bangkok condominiums to Kuala Lumpur and Shanghai. The company previously received positive responses from Singaporean and Hong Kong buyers that Bangkok is an ideal market for investment.
Most foreign investors know Bangkok and Phuket very well, and they benefit from friendly tax schemes. This will help boost future interest from new buyers, as well.
Khan predicted that 2014 will be a bright year for the prime resale market because there will be few prime units launched as land in the CBD is significantly higher. However demand is still there because Thais generally covet condominiums in CBD areas such as Sukhumvit, expressing a desire to acquire assets that will be part of their legacy.
Khan also mentioned that the condominium market in Pattaya is quite interesting. As a holiday resort for foreigners, 49 percent of the foreign quota in a condominium projects sells quickly, while the 51 percent for Thais remains.
Demand from Thai buyers is not significant in this market. High-end projects, such as Reflections, received good responses from Taiwanese and Hong Kong buyers while budget condominiums, such as Laguna, Maldives and Acqua, were popular among Russians. This year, the new supply included 17,064 units; 57 percent of this is located in the Jomtien area.
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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