Bangkok Condominium Market Report Q1 2010

8/9/2019 Bangkok Condominium Market Report Q1 2010

1/15

Th Kd Rprtco l l i e R s i n T e R n aT i o n a l | T H a i l a n D

eut summryNew launches in Q1 2010 continue the breakneck pace set in the last quarter o 2009.

Tax incentives remain an impetus to temporarily boosting existing supply and the uture expirationo incentives at the end o May are likely to cool the market, allowing or some consolidation.

Demonstrations in Bangkok have had only a limited aect on condominium launches as end-userbuyers maintain interest in purchasing their rst property.

2010 is likely to see the largest completion o new supply since 1997 with an estimated increase ojust over 30,230 units compared with approximately 27,430 units in 2009. About 6,940 units weresupplied in Q1 2010.

n dmum uh dmt prprty mrkt Bkk

MaRKeT inDicaToRs

2009 - Q1 2010

sUPPlY

laUncHes

PRices

TaKe-UP

www.colliers.co.th

B a n g Ko K c o n D o M i n i U M M a R K e T | 1 s T Q Ua R T e R | 2 0 1 0

Source : Coll iers International Thailand Research

newlY laUncHeD conDoMiniUM UniTs DURingTHe YeaR 2009 - Q1 2010 BY QUaRTeR


2/15collieRs inTeRnaTional2

The Knowledge Report | 1st Quarter | 2010 | Bangkok Condominium Market

The rst quarter o 2010 continued where 2009 let o with theproperty market abuzz with new condominium launches. Nearly13,700 units were launched in Q1 2010, a handul ewer thanthe previous quarter. While the rest o the real estate sectorswere recording sclerotic growth in Q1, the condominium mar-

ket fourished due to its own internal demand generators. One othe primary actors behind this growth was the demand comingrom end users in the orm o rst time buyers. According to theReal Estate Inormation Centre (REIC), nearly nine tenths oall new condominium unit purchasers in Bangkok in 2009 wererom rst time buyers. Also about 46% o buyers were in the 20-29 age group. The reason they could place their rst step on theproperty ladder was that developers were targeting aordabilityby reducing the average size o one bedroom units which has ledto a reduction in the appeal or studios. A number o listed de-velopers are shiting their ocus rom high end condominiums tothe locally driven mid-end segment o the market.

The lure o mass transit has continued to play a signicant partin the escalation o the condominium market as developers seekto locate new projects in proximity to existing and orthcominglines.

Nearly 90% o purchasers o new condominium units in Bangkokin 2009 are rst time buyers.

Vantage by Eastern Star


3/15collieRs inTeRnaTional 3

Zoning




CITY AREA

The area covers our adjacent but competing sub-mar-kets: the Sukhumvit section comprising SukhumvitRoad between Soi 1 and Soi 55 to the north and Soi 2

and Soi 38 to the south; the Central Lumpini sectionincluding Phloen Chit Road, Rama I Road, SoiLangsuan, Soi Sarasin, Chitlom Road RatchadamriRoad, Witthayu Road and Rachaprasong Road; the

Silom / Sathorn section; and the Riverside section ronting theChaophraya River along Charoenkrung Road and Charoenna-korn Road, where several ve-star hotels are located. The City

Area is convenient or businessmen, expatriates and tourists, be-cause o its proximity to many oce buildings, retailing and localattractions.

CITY FRINGE AREA

This area covers three parts o Bangkok:

o Northern Fringe: This section covers theBTS route starting rom Ratchathewi Stationto Mo Chit Station to the north and the MRT

route starting rom Petchaburi station toBangsue station to the north.o Southern Fringe: This section coversNarathiwad Ratchanakarin Road, Chan Road,Sathupradit Road, Charoenkrung Road andRama III Road along the Chaophraya River.

o Eastern Fringe: This section covers the BTS route starting romThong Lor Station to On Nut Station to the east, Rama IV Roadand Petchaburi Road,

This area covers locations with their own local inrastructure andconvenient transportation but require commuting to have accessto the central business and entertainment areas.

OUTER CITY AREA

The area covers two parts o Bangkok:

o Outer City (East): This section starts rom

the extension o the BTS route at On NutStation to the Bangkok boundary to the east.o Outer City (West): This section starts rom

the extension o the BTS route at Taksin Station to Bang Wa

station which includes the area rom Krung Thonburi Road toRatchaphruek Road near Petchakasem intersection.

SUBURBAN BANGKOK

These are the environs outside the areas alreadymentioned. Expansion o the mass transit system is themain determinant or increasing uture supply in aparticular area. The expansion rom On - Nut to SamutPrakarn is scheduled to be completed in 2011. Theexpansion o the BTS will benet directly the

surrounding condominiums, as it will considerablyreduce transportation costs and time. This willencourage the development o new condominiums inthis area. Suburban Bangkok represents the biggest areaand or the purposes o this report includes Bangkokcity old town (Koh Rattanakosin area and boundaryarea). This location has comprehensive town planningcontrols restricting building height, so there are nocondominium projects in the area.


U - Delight @ Jatujak Station



Although suburban Bangkok area continued to lead with justunder 8,400 units being launched in Q1 2010, within the urbanarea the Northern Fringe remains the main target or developersdue to the existence o mass transit lines, especially the BTS.

One particular project called U-Delight rom Grande Unity De-velopment was launched with over 900 units. This representednearly a third o the total launched units in the northern ringearea or Q1 2010.

The majority o new launches were in the low to mid end cat-egory with a number o large scale projects being launched in thesuburban Bangkok area with Chapter One Modern Dutch romPruksa Real Estate Plc, Parc Exo Kaset-Naramin rom PhusiriProperty Co., Ltd. and Lumpini Place Ratchayothin rom LPNDevelopment all with over 1,000 units each put on the market.The latter was sold out in one day and contained small sized onebedroom units.

In the higher end category, the PYNE by Sansiri was launchedwith 298 units. This development, next to Ratchathewi BTS sta-tion, was sold out on the rst day. Chamchuri Residence, alreadybuilt, was ocially launched in Q1 2010 with three to our bed-room units available.

While listed developers continued to dominate in terms o num-ber o units launched, Q1 2010 was notable or minor, non-listeddevelopers oering smaller scale projects to the market. The av-erage size development in Q1 2010 was 472 units compared with532 units in Q4 2009. The average size rom listed developersamounted to 707 units compared to 280 units rom non-listeddevelopers or Q1 2010.

Source : Colli ers International Thailand Research

newlY laUncHeD conDoMiniUM UniTs in Q1 2010 BY locaTion


Chapter One Modern Dutch



Source : Department of Land, Colliers International Thailand Research

Total supply o condominium units in Bangkok as o Q1 2010 isapproximately 270,000 units, new supply added in Q1 2010 was

just over 6,940 units or approximately a quarter o the total newsupply in 2009 (approximately 27,430 units) Total condominiumsupply scheduled to be completed in 2010 is estimated to be

about 30,230 units. The hangover rom the Asian Financial Cri-sis abated in 2007 and now growth in the condominium market

has been intensiying rom that period onwards.

sUPPlY o conDoMiniUM UniTs

Source : Department of Land, Colli ers International Thailand ResearchRemark : The number of units does not include projects from the National Housing Authority

HisToRical sUPPlY

sUPPlY BY locaTion To Q1 2010




Suburban Bangkok contains by ar the lions share o condomin-ium development due to its sheer size and appeal to low and midend mass residential projects. Within the urban Bangkok area,

the Northern Fringe and City area dominate due to the locationand access to mass transit lines.

Approximately 1,230 condominium units were added in Q1 2010which raises the total units in this area to just shy o the 21,000mark which represented an increase o over 6% rom 2009. TheNoble Remix added 518 units in Q1 2010 and 368 units camerom The Emporio Place by TCC Group. Total condominium

supply scheduled to be completed in 2010 is around 2,150 units.Despite its high land prices and limited land plots available ordevelopment, the City area still continues to be a key locationor high-end condominium projects.

ciTY aRea

noRTHeRn Ringe aRea

Source : Colliers International Thailand Research





The Northern Fringe area had a new supply in Q1 2010 o almost1,270 units. This area, covering many mass transit stations, hasbecome the dominant player in condominium development inurban Bangkok. In 2007 it surpassed the City Area in overallsupply. While the BTS in this area has been in operation or over

ten years, the development o residential products hugging these

lines continues apace. New sought ater locations are coming tothe ore, notably Ari, a ew stops away rom the centre. The con-tinual rapid growth demonstrates how new condominium devel-opment along new mass transits lines can remain durable manyyears ater completion and operation.

While the suburban Bangkok area continues to be the biggestplayer, new urban supply now clearly outpaces the suburbs. Thisrefects the increasing urbanization o the city. For the next cou-ple o years the Northern Fringe area is set to dominate urbansupply. The main reasons o the popularity o Northern Fringearea is the relatively lower land prices compared to the City areaand the proximity to a large number o MRT and BTS stations.

The two new growth areas are located in the Outer City areaswhere the BTS extension has begun operations in the west and

is scheduled to start operation in the east in late 2011. While the

Outer City West shows rapid development, this will be limiteddue to the extension only encompassing two new stations. TheSouthern Fringe continues to be the laggard due to no mass tran-sit lines being built or even planned in this area. Only the newBus Rapid Transit eeder system, set to start operation in 2010, isthe only hope or igniting interest in this area but the success osuch a system remains highly uncertain.

UTURe sUPPlY

UTURe sUPPlY scHeDUleD To Be coMPleTeD DURing THe YeaR 2010 2013

BY locaTion. (as o Q1 2010)



Noble RE : DA Space Asoke - Ratchada



DeManD DRiveRs ocUs

Unit sizes

Developers have continued to bring average unit sizes down and

have ocused on one bedroom units. Some projects only containthis particular conguration. These smaller sized units oer fex-ibility as they can cater or young amilies buying their rst homeas well as singles looking to rent or purchase a studio style pad.Colliers International Thailand have located what is believed tobe the smallest standard unit size or a one bedroom condomin-ium. These are located at L.P.N. Developments Lumpiniville

Ratburana-Riverview which was launched in Q1 2010 and con-

sists o 26 sq m unit sizes. Unit sizes in other projects are in the28-34 sq m range and consist o sliding doors which means theycan double up as a studio style unit. Consequently the appeal osolely studio units has diminished.

Mass TRansiT lines

BTS and MRT lines remain a considerable draw or condomini-um demand with prices rising dramatically in relation to the dis-tance to the project. Colliers International Thailand Researchhas calculated that within the City Area, prices within 200 me-tres rom the BTS line are at an over 20% premium to thoselocated over 500 metres away. In the Northern the dierencerises to around 75%. However this is not a surere way or success

as discussed in the Take Up section.

L.P.N. Developments Lumpinivill e Ratburana-River view and plan of its 26 sq m one bedroom units.

oReign DeManD

The condominium market has been almost solely lead by domes-tic demand due partly to the launching o more aordable unitsin the low to mid end category and the current unstable politicalenvironment that deters oreign investment. There seems to bea modest revival in oreign demand in luxury projects such as theRitz Carlton Residences but is largely conned to buyers who areamiliar with Thailand.




inTeResT RaTes

The one-day repurchase rate has continued to remain at 1.25%during Q1 2010 due to the precariousness o the global economicrecovery and instability within the country. Most analysts pre-

dict that the rate will remain unchanged until some time in thesecond hal o 2010 when infationary pressures are likely to takehold. The current low interest rates have also been a boost or

demand. However uture rises may temper demand somewhat al-though most buyers would have likely accepted that present lowrates are unlikely to be sustained in the long term.

TaKe UP

The take up rate or condominium projects in Bangkok or Q1was approximately 68%. The occupancy rate in the Eastern Fringearea is the highest but this was because only one developmentwas launched in Q1 namely the Lumpini Place Rama 4 Klu-aynamthai project which sold out all o its 887 units in 3 hours.

Second came suburban Bangkok and the Northern Fringe areawith both around 66%. The low gures recorded or the OuterCity West refects the high selling prices o newly launched proj-ects which are deterring potential buyers rom making a swit de-cision. The lower numbers or the Outer City East are explainedby the poor reputation the city has or delays to its mass transitlines, the main spur or development in this area along with thepoor location o many projects along sois some way rom the u-ture BTS extension line. The City Area gures are due to thehigh costs o purchasing property in this area.


sales PRoPoRTion o newlY laUncHeD UniTs in Q1 2010 BY locaTion


Lumpini Place Ratchayothin




TaKe UP in PRoxiMiTY To exisTing Mass TRansiT lines

Take up rate o condominium projects ar rom BTS / MRT linesless than 200 meters came close to 73%, a high gure consideringthe relatively higher prices as discussed earlier. However projectslocated 201 500 meters rom BTS / MRT lines showed the low-est rate o around 26%. This low gure is due to many projects

being located away rom the main road sometimes in out o theway sois but with selling prices still high or similar to projectslocated on the main road or nearer to BTS / MRT lines. Projectslocated urther than 1,000 meters came second at nearly 73%due to the low selling price o projects.

TaKe UP RaTes 100% solD oUT veRsUs THe waiT anDsee aPPRoacH

When price is the primary issue then a reputable developer pro-

viding reasonable quality units at an aordable price has beenlargely successul in selling out its units within a ew days or evenhours in a number o cases. While the City Area and locationsalong mass transit networks remain key draws, potential buyersare unlikely to rush into decisions and are more discerning in

their choice. This would refect consumer behavior or higher

end products in general. Developers still need to consider thespecic location, even i close to mass transit stations; as well asconguration, design and aordability.


Mahanakorn Project

Supalai River Resort



iniTial laUncH PRices

Note: Figures or City Area, Eastern Fringe and Southern Fringeor Q1 2010 have not been included as projects in the City Areaare unrepresentative due to their poor locations and only oneproject has been launched in the other two areas respectivelywhich does not refect the general market.

The average selling price in suburban Bangkok area decreasedby around 23% due to condominium projects in this area be-ing located ar rom public acilities and main roads. A similarpattern can be seen or Outer City East. The drive or aord-ability in a still uncertain economic and political environmenthas kept prices stable and this is likely to continue or the resto the year.


selling PRices o newlY laUncHeD PRojecTs BY locaTion 2005 Q1 2010


Pyne by Sansiri



laUncH PRices: Mass TRansiT eecT


selling PRices o newlY laUncHeD PRojecTs BY PRoxiMiTY ToMass TRansiT lines 2009 Q1 2010

As discussed earlier the proximity to mass transit lines can have a

signicant impact on prices. From initial research it appears thatthe urther out rom the city centre the stations are the greaterthe eect they have on pricing. In the Outer-City East pricescome close to doubling between those condominiums locatedover 500 metres away and those within 200 metres. The dier-

ence in distance is signicant when considering the more or less

year round heat in tropical climates like Bangkok. Literally anextra 100 metre walk can wreak havoc on a shirt or blouse duringa walk to work. Taking regular taxis and motorbikes or just 500metres even or a small amily would be cost prohibitive withouteven considering the hassle actor.


Fuse Sathorn - Taksin



oRecasT

The quadruple spur o lower unit sizes, mass transit lines, government taxincentives and low interest rates have provided the basis or the dramatic risein condominium launches over the past two quarters. This will ensure robust

supply going orward or the next couple o years. It has been predicted thatinterest rates will rise in the second hal o 2010 as the economy starts to show signs ocontinual growth and that the tax incentives will cease at the end o May. Withthese in mind it can thereore be expected that the number o launches will remainhigh or Q2 and then rapidly reduce in the second hal o 2010. This will not benecessarily a bad thing as developers can consolidate and ocus on construction othe new projects. However the demand or aordable residential properties remainsundiminished due to the growing middle classes and urbanization o the country.

The continual rapid selling out o low to mid end projects shows that pent updemand has not been sated. Thereore we predict continual, i slower pacedlaunches going orward and a continued robust market or the next ew years.

In light o the recent demonstrations and a potential serious worsening o thepolitical situation the possibility exists or deterioration in Bangkoks economy. Inthis event there is a likelihood that interest rates will remain low and incentivesextended but in such an economic climate it is dicult to predict how immunelocal condominium purchasers will be.



15/15

Documents

Bangkok Condominium Market Report Q1 2010