Published on January 31, 2005

Outlook bright for sites in city centre

It’s hot, dirty, noisy and crowded. But Bangkok’s urban sprawl, made worse by chronic traffic jams and pollution from exhaust fumes, is proving a goldmine for inner-city condominiums.

“Office workers, both management and staff, have little choice but shift to live nearer their work place,” said one developer.

“Traffic congestion, which is the worst now than it has ever been, will pressure urban workers to move closer to town,” reasons Metro Star managing director Ratanachai Pantinavin. His company is currently building Silom Grand Terrace, off Soi Sala Daeng and St Louis Grand Terrace, off Sathorn Road. Both sites have secured hundreds of buyers over the past year.

Metro Star is planning two more condominium projects this year, said Rattanachai, as demand for inner city homes grows.

The government’s policy to decentralise commerce to the provinces has proved extremely slow the past two decades and despite paying plenty of lip-service to curing Bangkok’s congestion, the trend shows that things are not going to get any better as urban migration grows.

But this is good news for high-rise residential property developers.

With the vast number of jobs concentrated in Bangkok, developers would be busy supplying city units for a long time, said Supalai’s deputy managing director Atip Bijanonda.

“Fundamentally, the condominium projects are one of the most lucrative markets for builders,” he said. “The demand will continue to grow with the growing number of city workers. The traffic problems we saw in the past year can only get worse.”

Supalai has four condominium projects and is adding at least two more soon.

Condominiums will probably be the only solution for white-collar workers who do not wish to suffer commuting long hours for years on end.

Already, office workers driving to work from suburban areas such as Srinakarin, Bang Na and Rathanathibet spend about 100 hours a month stuck on roads.

Traffic on the expressways is clogged for hours on end every day, and ring roads don’t fare much better.

The Din-Daeng-Bang Na route on the expressway is one of the worst examples of the situation. The recent subway crash, which injured more than 100 people and shut down the service, cast a cloud about the reliability of mass transit systems.

Again, this bodes well for inner-city housing.

Richard Ellis managing director Aliwassa Pathnadabutr said quality projects along the Sukhumvit area have shown steady sales the past year.

“There is always a strong demand for well-placed locations. Projects that offer quality residences have little to fear,” she said.

But weak sites would fail after last year’s condominium shake-up, said developers.

“It is a competitive market which favours professional builders.

“Projects that are shabbily run and planned, and there are quite a few, will probably be halted due to low sales,” Aliwassa said. Unlike the pre-1997 crash, commercial banks are stringent about lending.

“Unless a project can show that it has secured a high level of sales, banks will not inject money into it,” said Atip.

“Until such time, the burden of financing rests purely on the developer and the buyers.”

Many fingers have been burnt so far, but seasoned players are expecting another solid year ahead. Supalai and Raimon Land, both with a portfolio of city condominiums, are expecting 20-30 per cent growth this year.

Atip said the largest market segment was now the middle-class market, where demand was greatest. “But these are mostly fixed-income buyers. Prices cannot be outlandish,” he noted.

His chief concern was that banks might tighten lending and curb the purchasing power of fixed-income buyers. “These buyers depend on access to credit,” he said.

To live in the cleanest part of the city, where unruly street vendors and country bumpkins don’t throw litter everywhere, one has to pay a hefty premium.

Luxury projects such as Athenee Residence off Wireless Road offer units for a starting price of Bt105,000 a square metre. A two-bedroom unit offering 94 square metres for Bt10 million.

Another luxury project, Park Chidlom, built by Hemaraj Land, is also offering city homes on clean landscaped grounds covering 5.4-rai near the British embassy.

Hemaraj president and CEO David Nardone said the site has continued to attract international and local buyers because of its location. Prices there start from Bt100,000 a square metre. The smallest unit covers 140 square metres and goes for about Bt14 million.

Itthi C Tan

The Nation

Post your comment to this story here