Condo prices forecast to rise on supply
Condo prices in the peripheral area of Bangkok are expected to remain stable, while prices in the central business district (CBD) and city fringe will increase slightly because of limited new supply, says property consultant Knight Frank Thailand.
Condo prices in the suburban areas of Bangkok will remain stable, but developers will have to conduct market surveys before embarking on projects in particular areas, said Potjaman Vorakitpokathorn, director of project marketing at the consultant’s residential department.
With the sharp increase in selling prices for condominiums in both the CBD and the city fringe, she said the condominium resale market in the former will compete with new condominium projects.
For that segment, end-users may look to resale units in well-maintained buildings rather than buying from new projects due to the cheaper price tags and larger unit sizes, she said.
According to Knight Frank Thailand’s research, Bangkok condominium supply at the end of 2016 amounted to 435,805 units, of which around 52,195 units were launched in 2016, representing an increase of roughly 13.6% year-on-year.
The majority of the new supply was from listed developers seeking to create a backlog for future revenue, as the high supply does not reflect a recovery in condominium demand.
The majority of new launches were still in the peripheral Bangkok area, representing 76% of 2016’s new supply, followed by the city fringe area at 14%.
There appeared to be a 10% rise in new supply in the CBD in 2016. Mostly in the second half of 2016, nine new projects were launched in the CBD, while 12 and 50 projects were launched in the city fringe and peripheral areas, respectively.
The majority of the new launches in the peripheral area of Bangkok in the second half of 2016 was along the MRT Blue Line extensions (Hua LamphongTha Phra-Laksong and Laksong-Phuttamonthon Sai 4), followed by a skytrain line extension (Bearing-Samrong-Samut Prakarn), with construction having progressed over 80%.
On the demand side, 315,393 condominiums had been sold out of the 435,805 unit total, representing a sold rate of 72.4%, a decrease from 75.3% for the previous year.
Only 26,595 condominium units were sold in 2016, decreasing by 59% compared with 2015, when approximately 64,170 units were sold. This could be due to the weakening purchasing power of buyers and more stringent loan standards set by banks.
As such, developers were also launching special promotional campaigns to boost their sales, including price discounts and special interest rate offers.
Meanwhile, the consultant said prices of newly launched condominium projects continued to climb throughout Bangkok but at different paces, depending on the location.
The average selling price of a condominium in the CBD was 229,180 baht per square metre, an increase of 5.3%. This was followed by the average selling price for city fringe condominiums, which increased by 4.8% to 134,842 baht per sq m.
The average selling price of condominiums in the peripheral area of Bangkok increased by 3.6 percent to 76,002 baht per sq m.