Nexus: 2016 Residential Market Trend Keeps Growing

Real Estate Press Releases Monday March 7, 2016 14:43
Bangkok--7 Mar--Agate Communication

Nexus Property Marketing reveals the residential market will continue growing at a steady pace. New supply in condominium market will likely to add 50,000 more units with a rise of at least 7% in prices. Inner-city condo will see a higher increase in prices than outskirt market or city condo.

Bangkok Condominium Market
Supply

In 2015, there were a total of 53,500 condominium units from 111 projects launched in Bangkok, making accumulative number of condominium in the market rise 13% from 2014 to 447,000 units. Growth rate of condominium supply during the past five years is approximately 22% per year. During the past two years, the growth was slowed down but represented a good sign of market adjustment to suit the overall economic and market situation. Top three locations where the number of new supply rose in the previous year were 1. Phra Khanong – Suan Luang 2. Tiwanon – Rattanathibeth and 3. Phetchakasem – Thon Buri. All of these three zones are along an extension line of the mass transit.

Demand

For condominium demand, an average sale of condominium newly launched in the market was 59% in 2015. Sales of the existing condominiums in the market totaled 54,000 units last year and accumulative sales of condominium totaled 393,000 units which represented the overall sold rate of 89%.

Source: Nexus Research, February 2016
Price

Condominium prices continued rising consecutively with an increase of up to 10% from 96,000 baht per square meter to 106,000 baht per square meter in 2015, particularly for inner-city condominium market. This was mainly due to high land costs and products which are in premium grade. For new projects launched in those three locations along an extension line of the mass transit like Phra Khanong – Suan Luang, Tiwanon – Rattanathibeth and Phetchakasem – Thon Buri, selling prices were approximately between 68,000 – 76,000 baht per square meter.

Source: Nexus Research, February 2016
Condominium Market Trend 2016

Super luxury and luxury condominium market: There will be over 500 units of newly launched in super luxury market this year. Most developers of these projects will be large developers with an international or domestic reputation as buyers will need to be confident in both brand and image of project as well as developer. Demand in this market is not only Thais but also international markets including Asian, Middle East and Europe. Condominium prices in this segment start at 250,000 – 300,000 baht per square meter and likely up to 500,000 baht per square meter. Unit price starts at over 20 million baht.

High-end Condominium Market: Condominium prices in this market range from 150,000 – 250,000 baht per square meter. Locations are usually close to the mass transit lines in the inner city while most developers are medium-to large-sized developers who can buy land plots at high prices and have a chance to seek a prime piece of land. Condominium prices mostly are 5 – 12 million baht a unit with unit sized mainly one to two bedrooms or 30 – 60 square meter. In the previous year, some projects recorded good sales during presale period while some had only 30 – 50% sold. There are some concern in this market in a long run when projects are completed. Since affordability of Bangkok people is a key factor to consider in this segment whether this is the real demand. For condominium speculation, the question is how much demand in the next one to two years will be able to absorb in this market.

City Condominium Market: There are two groups in the city condo segment: Group 1 is unit price of 2.5 – 5 million baht (80,000 – 120,000 baht per square meter). Group 2 is unit price of 1 – 2.5 million baht (50,000 – 80,000 baht per square meter). Buyers in this market are mostly Thais who buy mainly for residence, family expansion and as a first home. Some buyers are those are seeking for a second home for a temporary stay or as an investment. This product segment is situated in a convenient location and price is a key factor to consider when buying a unit, followed by function and usable space. Developers in this segment will also be smaller developers compared to other segments because branding and image for this segment is less important than for other segments and is smaller developers likely have lower costs of development. Demand in this segment is growing at the steady rate, given the fact that price per unit will not be far above their affordability.

Attractive Locations for Condominium in Bangkok remain super prime locations like Lang Suan, Ploen Chit, Sala Daeng, Phrom Phong and Thong Lo while riverfront location is eye-catching among many investors in both luxury and city condo. Locations near an extension line of the mass transits like the Green Line, the Yellow Line, the Orange Line and the Purple Line are also appealing. However, for land along mass transit, land price is a key factor that will greatly affect developers on product development to match demand of consumers in middle segment who are looking for city condo.

Trend in Bangkok Condominium Market 2016
Source: Nexus Research, February 2016
Housing Market in Bangkok: Luxury Housing Market in Inner Bangkok

According to growing trend that middle-to smaller-sized developers eyed on high-end housing projects in the city during the past year. This year, there are three new projects launched in Sukhumvit and Rama IX area and there will be another three to four new projects planned to launch this year. Despite a small number of units, this market is interesting as the product is an alternative to luxury condominium. The market will likely see a house priced over 100 million baht to test the inner-city market in a near future.

Adjustment of Both Large and Individual Developers in the Property Market

During the past few years, listed or large developers and smaller developers have adjusted strategy in residential projects development consecutively. There were acquisitions of medium-sized property business by other business that sought to enter the property business. Investment in residential market remains a key portfolio of developers. However, many developers have adjusted strategy by investing more in properties that generate a long-term income like hotels, shopping malls, and office buildings or in overseas to balance their portfolio.


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