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Condominium’s Performance Depends on Property Type and Location

By on Oct 24, 2012 in Research

Bangkok Residential MarketView Q1 2012

The performance of the condominium sector has been mixed depending on property type and location. We are seeing some broad trends emerging. In the luxury condominium sector we are seeing significant price increases for a limited number of the best quality, best location, larger two and three bedroom units and very limited new supply. There have been almost no new launches of larger units downtown and the supply of built but unsold inventory is in most cases steadily being cleared. The biggest change over the last three months has been in the luxury sector where the prices achieved by some recently completed projects have hit record levels. However, these price rises have not been seen in every recently completed building.

In the one bedroom condominium market performance has been more mixed. The results of some public listed developers show that some projects launched in 2010 and 2011 have not sold out.

Generally the best performing projects have been those close to mass transit stations. In some areas the one bedroom sector is going to come under pressure from developers unsold inventory and shadow inventory from units bought by speculative purchasers who want to resell before completion.

We expect that developers will become more selective about location focusing on mass transit stations. The challenge for developers will be to acquire land at a price where they can still build condominiums that are within the purchasers’ maximum budgets.

Their choice is either to buy cheaper land away from mass transit stations or to reduce the size of the units. Developers are trying to balance affordability with usability.

In the middle and entry-level markets, condominium prices have adjusted upwards, but to a lesser extent than the luxury market. There continues to be new project launches although the absorption rate is slower, compared to two years ago where many projects tended to sell out at launch. The top public listed developers dominate this segment of the market.

This is an extract from Bangkok Residential MarketView Q1 2012, click to download the full report.

Toby has been living in Bangkok for a number of years and has a strong research background. With his years in Thailand Toby brings a wide range of property knowledge to his research writing

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