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Residential market grows despite House Price Index

By on Dec 29, 2009 in Research, Residential

CB Richard Ellis sees residential market sentiment as positive throughout the majority of 2009 with prices and opinion improving quarter on quarter.

Millennium Condominium Towers Bangkok

A recent press release from another agent highlighted the drop in the house price index, placing Thailand’s residential market 38th out of a sample of 42, above Dubai and three Eastern European countries. Whilst the Thai House Price Index reflected the launch of cheaper houses, either of smaller size or more fringe locations, the implication that prices are dropping could not be further from the truth.

In terms of take-up, price per sq.m., transfers and occupancy the residential market continued to grow despite external economic conditions. A testament to the strength of this sector.

Achieved prices of re-sale condominium units in Bangkok saw:

  • 5.4% increase year on year
  • Occupancy up 8.4% to 73% (which in the current climate is impressive performance)

Buyers have reacted to the improving market by snapping up 78% of all units which are under construction.

In the luxury sector in central Bangkok, most recently completed condominiums like The Met, Athenee Residence, The Park Chidlom and Millennium Residence have seen rising re-sale values throughout the year and a marked reduction in units available for sale. Typically prices have moved up by THB 25,000 per sq.m., taking average luxury re-sales into the THB 150,000 per sq.m. segment.

Like other property markets globally, the Thai residential market was faced with challenging conditions in 2009. With 2010 approaching, sentiment is more positive. Several listed residential developers have earmarked significant funds for housing development next year. Preuksa Real Estate plans to launch 15-20 new projects and has set aside 4 billion Baht to purchase land in 2010. In addition, Quality House plans to launch 13 new projects worth around 15.6 billion baht.

The Government tax incentive packages are due to expire at the end of March 2010 and whilst the incentives may be extended at the last minute, we expect to see a rush of purchases in the first quarter of 2010 and hope that the positive sentiment continues beyond the March deadline.

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