Published on October 5, 2007
Property firms attract buyers by creating special events to promote their city condominiums.
Location and convenient transportation are the two main factors that lend advantage to condominiums located in Bangkok's central business district (CBD), as well as those located near Skytrain or subway routes, because they save on transport costs and slash the time taken in travelling to and from work.
On the other hand, condominiums located outside of the CBD must work hard to attract their target buyers.
Experts in the property industry agree demand for condominium units located in the Ploenchit, Chidlom and Sukhumvit areas is always high, and those located along new Skytrain routes will certainly have a bright future. But those located in the Ratchadaphisek, Lat Phrao and Phaholyothin areas could be at risk from faulty marketing analyses, because those locations are only attractive "at a certain level".
However, having so many condominium projects rising in the heart of Bangkok is certain evidence that this is the golden age of the condominium, and both newcomers and major players in the property-development industry are working hard to take advantage of it.
Offering a modern lifestyle for families that choose to live in high-rise buildings because of their convenience, condominiums in the CBD are enjoying a strong market. Many new projects have benefited from high revenue. Some are even sold out in the presale period.
However, it is not only their easy access that makes them attractive. Many styles are unique, totally dismissing all of the old perceptions of condominium units being limited, uncomfortable residences.
As well as those developers stirring up the current condominium trend, including Sansiri, Areeya Property, Property Perfect, Preuksa Real Estate, Chanissara Development, Supalai, Asian Property and Prinsiri, many others have adjusted their business plans to join the gold rush.
Property broker Realty World Alliance has become caught up in the condominium market. President and managing director Visit Kunatharakul says the company has more than 200 units on its books, with prices ranging from Bt1.2 million to Bt1.5 million, making them worth an accumulated Bt250 million to Bt300 million. The units are from people who have already taken ownership and those who still have loan instalments to pay for down payments, such as some units in Condo One located in the Lat Phrao area, City Home located on Ratchadaphisek Road and Noble Lite.
"A lot of people buy condominiums as investments," Visit says. "The prices keep increasing at 8-10 per cent a year after purchase. This has resulted in a boom in city condominiums, particularly those with prices in the low Bt1-million range."
Plus Property's Research and Development Department says the company has so far offered 61 new projects with a combined 16,933 units. It finished building 32 of the projects, with a total of 8,786 units, in the first half of the year. Combined with units from earlier projects, it currently has a total of 113,257 finished units - 8.4 per cent more than last year.
The company expects to finish building another 14,000 units in the second half and plans to construct at least 47,000 more in the next year or two.
Popular room types are studio and one-bedroom types, with prices ranging from Bt700,000 to Bt3 million. From a home-buyer's viewpoint, they offer the same convenience as bigger units, and the prices don't bring a big burden.
However, since high demand for condominiums will cause high demand for land and construction work, the cost of both are sure to rise. Therefore, in order to offer the same prices in the future, developers may have to diminish the size of individual units.
Within the next two years, there will be no fewer than 17,000 new condominium units on the market.
The overall average price for a unit is Bt78,501 per square metre, up 10 per cent from last year. Not surprisingly, the highest prices are in the CBD and around Sukhumvit Road, ranging from Bt86,222 a square metre in the Sukhumvit area (up 4 per cent) to Bt92,646 a square metre in the CBD (up 2 per cent).
In terms of price rises since construction, condominium units around Rama III Road have appreciated most, by 30 per cent to an average Bt70,000 per square metre, followed by the Phaholyothin Road area, where prices have risen 13 per cent to an average Bt60,248 a square metre, and the Phya Thai area, where prices have risen 11 per cent to an average Bt83,377 a square metre.
In the wider picture, prices of units in mid-range condominiums have climbed to almost Bt100,000 a square metre, while prices in high-end condominiums have increased to B200,000 a square metre.
"Prices of condominiums that are located along Skytrain routes have risen continuously, because of increasing demand. Normally, prices rise at a rate of 5-7 per cent above the original. Some projects even witness increases of 10-20 per cent," one source said.
Condominiums that are located along Skytrain routes but not in the Sathorn, Silom or Sukhumvit areas, as well as those that are located near shopping centres, have a big potential for price increases to Bt100,000 a square metre. They have high original and resale prices, because of demand from Bangkok residents, people from up-country and foreigners, all looking for a conveniently located home.
Meanwhile, prices per unit for high-end condominiums, starting with those located around Soi Langsuan and Wireless, Rajdamri or Sathorn roads, will continue to rise to starting prices of Bt200,000 a square metre.
The high demand has created a burgeoning market for investors who buy units for resale or rent. They sometimes buy many units in projects in good locations and either wait for the best time to sell or make money in the long-term from renting. Good locations will always give a good return, regardless of the country's economic situation. The chances of doubling an investment are high.
For example, the Pathumwan Resort condominium, which was launched in 1997 and priced at Bt42,000 a square metre, suffered a price drop that year to only Bt35,000 a square metre. Today, its prices have increased to Bt70,000 or Bt80,000 per square metre.
CB Richard Ellis (Thailand) managing director Aliwassa Pathnadabutr says that over the past five years, her company has witnessed increases in prices for condominiums reaching 30-50 per cent. In 2002, the average price for a condominium on Sathorn Road was Bt58,100 a square metre, while today it is Bt108,000. In that same year, condominium units in the Sukhumvit area cost Bt49,000 a square metre, but today the figure averages Bt88,000.
Prices for condominium units even increase while they are being built. In the early construction period, prices will rise 10 per cent over the developer's original figure. During the middle construction period, the price rises accelerate to 15-20 per cent and they reach their peak when construction is nearly complete. Then, the appreciated prices become the "standard" prices for future reckoning.