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Downtown Bangkok condo market set for competitive year: CBRE

By on Mar 09, 2015 in Property News, Residential

Bangkok PropertyThe residential and office markets look set for growth this year, while the retail market will see a bit of a battle of the giants, according to research by property agency CB Richard Ellis (Thailand). The CBRE survey shows that the downtown Bangkok condominium market will be competitive with the launch of many new developments, but continued demand will ensure that opportunities exist for the canny investor. The company is seeing the return of foreign investors, drawn by the more stable political situation and lack of opportunity in their own markets.

The outlook remains bright for super-luxury projects. Despite being a slow year overall, 2014 saw units at five super-luxury properties achieve record-breaking prices upwards of Bt300,000 per square metre.These were: 185 Rajdamri, at Bt330,000 per square metre, and The Sukhothai Residences, The Ritz-Carlton Residences Bangkok, Magnolias Waterfront Residences, and Marque Sukhumvit, each at Bt310,000 per square metre. “The luxury market has proven to be solid with a low cancellation rate, unlike the speculative market,” said Aliwassa Pathnadabutr, managing director of CBRE (Thailand).

James Pitchon, executive director and head of CBRE Research, Thailand, added that this market segment’s price increase was reflected to a somewhat lesser extent in the resale market as well. Buildings that have been completed over the last 10 years in prime locations, such as Athenee Residence and The Park Chidlom, have achieved prices in excess of Bt200,000 per square metre, which is double the price when they were sold off-plan in the mid-2000s. Good management, timely maintenance and renovations are the key to value appreciation in older buildings. However, this is still somewhat of a rarity in Bangkok where the emphasis is on new product, he said. With land prices on the rise, this could be a new golden era in the making for owners of older buildings who invest in the renovation of common areas and system maintenance at their properties, making them more attractive to prospective buyers, he added.

The midtown and suburban market is facing challenges of its own. CBRE calculates more than 100,000 units are due for completion over the next 18 months, with the majority of them one-bedroom properties. Affordable landed property such as townhouses and detached houses are of much interest to families that would like a large living area and perhaps a garden with ample parking. Families needing a large living area will not select a midtown or suburban condominium because the price per square metre of living area at a condominium in a midtown suburban location is higher than the price in a townhouse or detached house due to higher constructions costs, the research found. A 100-square-metre condominium on Rattanathibet along the MRT Purple Line would cost about Bt7 million. For that price, a detached house with 200 square metres of living area could be purchased, less than 2 kilometres from a Purple Line station. Demand for midtown and suburban condominiums will be limited to one-bedroom units. Given that prices of detached houses have been rising because of higher land prices, CBRE sees townhouses as being the most affordable and therefore most popular type of landed property.  “The next couple of years will be the years of the townhouses,” said Pitchon.

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