Record Off-Plan Bangkok Luxury Residential Prices in 2016
21 Dec 2016
While less buoyant than previous years, the Bangkok luxury residential market witnessed a series of high-profile launches and record off-plan sales prices over 2016, outperforming an overall residential sector more widely overshadowed by slowing sales and rising mortgage rejection rates, according to CBRE, a leading international property consultancy firm.
While a number of developers delayed project launches following the October 13th passing of His Majesty King Bhumibol Adulyadej, average asking prices for downtown off-plan, high-end and above condominium units are on track to average around THB 219,000 per square metre, representing an increase of 4.7% year-on-year.
Demand for luxury residential property in Bangkok continued to be dominated by Thai buyers, accounting for around 85% of condominium units sold where the price per square metre averaged above THB 200,000 at a minimum of THB 10 million per unit. CBRE has also seen a continued appetite for projects located in Bangkok’s prime residential areas, with affluent buyers focused on Sukhumvit, Sathorn and Central Lumpini.
The number of luxury (THB 200,000 – 299,999 per square metre and THB 10 million and above per unit) and super luxury (THB 300,000 and above per square metre and THB 20 million and above per unit) condominium projects launched in Bangkok approximately halved, compared to 2015, standing at 725 units, accounting for an 11% share of total launches, down four percentage points year-on-year. This trend was further mirrored in the landed property sector, with the number of luxury downtown residential houses launched over 2016 falling to 45 units, down from 136 over the previous year, with average prices per unit increasing by 5.1% to around THB 55 million.
2016 has seen 13 projects achieving sales of individual units priced above the THB 300,000 per square metre mark, with 185 Rajadamri and The Ritz-Carlton Residences, Bangkok achieving a number of individual sales in excess of THB 400,000 per square metre. Marque Sukhumvit became the first project on Sukhumvit to reach the THB 400,000 mark, as of the fourth quarter. While these transactions do not reflect the average price per square metre achieved across the aforementioned projects, such sales are encouraging.
CBRE expects both the luxury condominium and landed residential property sectors in Bangkok to outperform mid- to lower-end projects over the course of 2017, with buyers less affected by the difficulties in obtaining mortgages cooling the wider residential market. The luxury sector will further avoid the challenges caused by the peak in supply of mid to low-end projects.
While CBRE forecasts prices of Bangkok luxury condominiums to rise over next year, in the context of continued land price appreciation, CBRE expects the growth rate to reduce, as significant price rises during the past three years serves to reduce the accessibility and, in turn, the pool of prospective purchasers. The considerable rise in prices at new launches will likely serve to increase interest in resales of existing units, as buyers seek to take advantage of the ever-growing gap, at times as high as four times the price, between existing and off-plan sales prices across comparable projects in similar locations. This interest will be limited to professionally managed, well-maintained buildings.