Oversupply Causes Flat Land Prices in Bangkok

February 12, 2019


An artist’s rendition of a three-storey single detached house at Issara Residence Rama 9 with units priced from 100 million baht.

SET-listed developer Charn Issara Development Plc is upbeat about strong demand in the luxury housing market as the new lending curbs by the Bank of Thailand will not affect this segment.

Chief executive Songkran Issara said the central bank’s loan-to-value (LTV) limits, due to take effect from April 1, will have no impact on customers in the luxury housing market as they have high purchasing power.

“About two-thirds of our customers in the upper-end segment use cash and do not borrow,” he said. “Competition in this segment is not as high as supply is limited, with a share of only 10% of the total residential market.”

Another factor for limited supply in the high-end market is difficulty in seeking land plots with a feasible price for new project developments of luxury houses.

He said the LTV limits will likely have an impact on the middle- to lower-end segments, which have high competition. After the new lending curbs take effect, these two segments may see a slowdown.

“Although the overall property market this year may get pressure from many negative factors, the scheduled general elections will boost people’s confidence if the new government has stability,” he said.

Charn Issara yesterday launched luxury single detached house project Issara Residence Rama 9 worth 2 billion baht.

The project will be located on a nine-rai plot on Rama IX Soi 13 with only 20 units sized between 113 and 208 square wah each, with unit prices starting from 100 million baht.

The project had 50% of units sold and the company expected to be sold out by the end of 2019.

Aliwassa Pathnadabutr, managing director of property consultant CBRE Thailand, said there were only seven projects with a total of 271 units in the super-luxury segment or a house with unit priced from 70 million baht and above.

The supply in this segment is located in three locations comprising the central business district areas (like Sukhumvit and Sathon), inner Bangkok locations (Ratchadaphisek, Rama IX and upper Pattanakarn) and Bangkok’s suburban areas (KasetNawamin, Krungthep Kreetha and Bang Na).

According to CBRE’s research, target customers in the luxury segment will usually choose between a single detached house on a large land plot in Bangkok’s outskirts, where travel time to the inner city takes longer, or a location in the inner city, with a townhouse or a three-storey, or a larger house without a green area.

CI shares closed yesterday unchanged on the Stock Exchange of Thailand at 1.30 baht, in trade worth 58,240 baht.