Are Con­do­minium Prices Ris­ing?

Thai-American Business (T-AB) Magazine - - Front Page - Writ­ten by: James Pitchon

CBRE is of­ten asked how the con­do­minium mar­ket is and if prices are ris­ing or fall­ing. In Bangkok, there is no sim­ple an­swer to this. There are now ten con­do­minium projects, two com­pleted and eight un­der construction, where av­er­age achieved prices are now over Baht 300,000 per square me­ter ( see photo). At the same time, there are older con­do­minium projects in prime lo­ca­tions where prices have barely moved in twenty years and trade in the re­gion of Baht 50,000 to 60,000 per square me­ter. Much of this has to do with buy­ers’ prej­u­dice against older build­ings de­spite the fact that all build­ings will be­come old one day.


The real es­tate agent’s mantra of “lo­ca­tion, lo­ca­tion, lo­ca­tion” as the sole de­ter­mi­nant of price does not ap­ply in Bangkok. Lo­ca­tion is one of many fac­tors in­clud­ing age, unit size, de­sign, spec­i­fi­ca­tion, to­tal num­ber of units, own­er­ship pro­file and oth­ers.

The ma­jor­ity of con­do­minium pur­chasers in Bangkok are Thai. Only 20% of pur­chasers of Bangkok’s luxury down­town con­do­minium prop­er­ties are over­seas buy­ers and there are not many for­eign pur­chasers in the mid­town and sub­ur­ban con­do­minium mar­ket. His­tor­i­cally, Thai pur­chasers have favoured new prop­er­ties but as the price gap widens be­tween old and new prop­er­ties, this may change as buy­ers start to over­come their prej­u­dices and see value in older con­do­minium prop­er­ties. Com­pared to other cities, es­pe­cially in Europe, Bangkok’s older prop­er­ties are rel­a­tively new with few more than 25 years old. This price dis­crep­ancy be­tween old and new projects com­bined with the ab­sence of pub­licly avail­able trans­ac­tion data makes com­ment­ing on price move­ments chal­leng­ing.

CBRE fore­casts that the price of new prop­erty in prime lo­ca­tions is go­ing to in­crease be­cause the price of prime land is go­ing to con­tinue to in­crease. This has been the pat­tern for the last thirty years with an in­ter­lude fol­low­ing the 1997 Asian cri­sis when land sales just about ceased and there were only a few ex­am­ples of site sales at lower than pre­vi­ous prices.

The far more dif­fi­cult ques­tion is what will hap­pen to prices in prop­er­ties that are ten or twenty years old. There is some ev­i­dence of prices ris­ing in older prop­er­ties that were well de­signed and have been well main­tained. Con­versely there are other build­ings where the orig­i­nal de­sign of­ten com­bined with poor main­te­nance and lack of ren­o­va­tion and im­prove­ments has meant that there are a few in­ter­ested pur­chasers even at low prices.


Many peo­ple are shocked by the best prop­er­ties in Bangkok achiev­ing price lev­els of Baht 300,000 per square me­ter, but the best apart­ments in Hong Kong are priced at over Baht two mil­lion per square me­ter and that is for a lease that will ex­pire in June 2047. Prices for the most ex­pen­sive Singapore con­do­mini­ums are more than 4,500 Singapore dol­lars per square foot or Baht 1.25 mil­lion per square me­ter. These are spe­cial mar­kets where the com­bi­na­tion of both ge­o­graph­i­cal short­age of de­vel­op­ment sites com­bined with gov­ern­ment poli­cies con­trol­ling land use have ar­ti­fi­cially re­stricted new sup­ply. Hong Kong and Singapore are Asia’s bench­mark prop­erty mar­kets against which all other re­gional mar­kets are mea­sured. De­spite the 200% in­crease in prices for new prop­er­ties over the last 20 years, Bangkok still looks like good value com­pared to Hong Kong and Singapore.

Over­all in 2016 the con­do­minium mar­ket is slower with fewer new sales, new launches and re­sales but prices for new projects will con­tinue to rise be­cause of higher land prices. The re­sale mar­ket for ex­ist­ing prop­er­ties, es­pe­cially those more than 20 years old, is go­ing to be very mixed with pur­chaser in­ter­est and price ris­ing for some prop­er­ties and no price move­ment and few sales in oth­ers, but this will be one of the most in­ter­est­ing mar­kets to watch and the most chal­leng­ing to in­vest in be­cause of the huge range in price per­for­mance for sim­i­larly lo­cated prop­er­ties.

James Pitchon is Head of Re­search at CBRE Thailand. He can be con­tacted at James. Pitchon@ cbre. co. th.

Luxury con­do­mini­ums in Bangkok

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