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CBRE’s View On The Luxury Sector

By on Jul 31, 2014 in Property News, Residential

the Managing Director of CBRE ThailandCBRE Thailand held what it titled an ‘Elite Living’ showcase in Bangkok last weekend, shining the spotlight on around 12 of its sole agency projects in the plush surroundings of the Four Seasons hotel in the heart of Bangkok.

DDproperty.com caught up with Khun Aliwassa Pathnadabutr (pictured), the Managing Director of CBRE Thailand, for an one-on-one chat about the luxury property market in Bangkok and beyond.

What impact did the events of May have on CBRE Thailand?
Sales slowed but it was as much to do with a slowing of investor sentiment as with a slowdown in demand. For Thais, there is ongoing demand, but the slowdown was partly because of the events of May and partly because there was no new supply of good, new luxury property projects.  We have been selling mostly remaining units of projects under construction for the last couple of months.

Who is buying Thailand luxury property right now?
It is 90 percent people based in Thailand, and the 10 percent from overseas are mainly coming from Singapore, Hong Kong, Taiwan. We’ve also seen a few Japanese and Chinese buying in Thailand, but the first three remain the three dominant countries for overseas luxury property buyers in Thailand.
How difficult has to been difficult to convince developers to take part
It’s not been difficult at all. The cost to take part in something like this is much lower than if they tried to do it by themselves. Our intention to hold an event like this is to make it more exclusive and to focus on Thailand.

Is the word ‘luxury’ overused?
We need to analyse the market to define luxury. We say the price point between THB170,000 per sqm up to THB240,000 per sqm can be defined as luxury, and over that is super-luxury. Size is also a factor, and if we look back to 1989 you could get double the space you can now, but the price is still the same, or even lower. Some projects are selling at THB170,000 per sqm for a 30 sqm unit but whether you can call that luxury is up to the buyer to decide.
If the unit is small and the price is high then it doesn’t feel like luxury, in my opinion.

What does Bangkok need in terms of properties?
We lack downtown properties that are of a reasonable quality, reasonable size and at an affordable price.
But we’re not going to get that, are we?
We’re not going to get that. There is a mismatch or supply and demand and the cost of land will prevent that, but you can get it in low-rise buildings. The problem is that most buyers are reluctant to look at low-rise buildings and pay high prices because of a lack of a view, and lower ceiling heights. It’s still not a product that people like to buy.

I think we will see people looking again at older buildings with reasonable property management because the price is lower.

You can get double the size of some newer units in resale units, but the problem is property management. That depends from project to project and appreciation varies greatly.

Where else besides Bangkok are you seeing interest?
All major resort markets in Thailand are seeing interest. I look at Phuket, Pattaya, Hua Hin and Khao Yai. For Thai buyers they are mostly looking for a place where they can drive within two hours from Bangkok. Their lifestyle doesn’t involve flying a lot to Phuket. The products we sell to Thais from Phuket are not very successful.

Hua Hin is quite crowded and there is a lack of land along the beach for development, so people have turned to Pattaya with its affordable high-rise projects and sea views, and you can still find a quiet beach.

Khao Yai is interesting because elderly people are looking there for retirement. The weather is cool and very natural. Younger people don’t like it; they say there is nothing to do there, but it’s gradually growing in popularity. It’s good to invest now because there is still upside potential for the future.

Where would you buy personally?
Personally I would like to buy in Lumpini in the centre of Bangkok. If there is any freehold project coming up in Lumpini or the Langsuan or Ploenchit areas, even if the price per sqm is high, I still believe it’s a good investment.

What other advice do you have for Thai property developers?
If a developer is looking to sell a project over THB200,000 per sqm they need to think carefully. They need to make their products different from what is there already. They should focus more on common areas rather than gimmicks in the units themselves. I think this will lead to a better range of products.

DDnews-CB-elite-14

Source: www.ddproperty.com | July 29, 2014

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