Bangkok--11 Oct--CB Richard Ellis Group
The Bangkok condominium market registered a higher number of newly launched units in the mid-range and lower-end markets whereas there were only a limited number in the luxury segment. Demand remained strong despite some uncertainties, according to international property consultants, CB Richard Ellis.
As of the third quarter of 2006, the supply of condominiums in downtown Bangkok totalled 45,022 units. The number of freehold condominiums stood at 43,046 units, indicating an increase of 727 units in the four new projects that were completed: Ficus Lane, Fullerton, The Master Sathorn Executive, and The Platinum, while the leasehold total remained the same as in the fourth quarter of 2005.
Based on the latest survey by CB Richard Ellis Research team, out of the total number of freehold condominiums in Bangkok, only 4,092 units are at the top and high-end levels, representing 9.5%, while 38,960 units or 90.5% are positioned at the mid to lower-end of the market.
Looking at the luxury sector of the Bangkok condominium market, new trends concerning product classification have become apparent: comprising the high-end and top-end. The main criteria for this classification are location, product quality, design, unit layout, unit size, specifications, facilities, views, surroundings and price.
Given these criteria, the majority of the existing luxury supply is situated in Sukhumvit (49.3%). This is followed by Central Lumpini (18.8%), Silom / Sathorn (18.8%), and Rama III / Riverside (13.2%). CB Richard Ellis estimates that the future luxury supply will consist of 5,082 units; 2,040 top-end units and 3,042 high-end units. These are expected to be completed between the fourth quarter of 2006 and 2009.
The major developers who have been most active in launching products in the luxury segments include Major Development, TCC Capital Land, MR Sukhumvit, Sansiri, Riverside Homes Development, and Hotel Properties Limited.
There is continued demand for condominiums, both for own use and investment purposes, in the business districts despite the economic and political uncertainties. “In the week following the coup, CB Richard Ellis continued with business as normal. We still saw the same level of activities such as enquiries, sales performance and site inspections at our Bangkok, Pattaya and Phuket offices” according to Ms. Aliwassa Pathnadabutr, Managing Director of CB Richard Ellis Thailand.
As Thailand continues to launch attractive residential properties and offer good value for money, CB Richard Ellis has seen an increase in demand from foreigners buying condominium units in downtown Bangkok. The top five nationalities of overseas purchasers are British, American, Singaporean, Hong Kong Chinese, and French.
Overseas buyers are becoming increasingly important for the Bangkok luxury condominium market despite the 49% limit on foreign ownership and restrictions on overseas purchases borrowing money to finance property acquisitions.
Ms. Aliwassa commented, “If the government wishes to grow demand for condominium property in Bangkok and Thailand’s resorts, then the 49% limit on foreign ownership should be increased. Another measure would be to allow overseas purchasers to borrow money locally to fund condominium property purchasers.”
According to CB Richard Ellis, approximately 40% of luxury units sold in Bangkok are being purchased by overseas buyers. This varies from project to project. “We have analysed the reasons driving this growth in overseas purchases by interviewing all purchasers in Bangkok condominium projects being sold by CB Richard Ellis. Interestingly, over 50% of overseas say that they are purchasing property for their own use either as permanent residence or a second home to use for the part of the year. The remaining purchasers are either buying to rent or for capital growth,” added Ms. Aliwassa.
Approximately 25% of overseas purchasers already live in Thailand. The biggest increase has been in overseas purchasers resident aboard.
CB Richard Ellis believes that this increase shows the continued attractiveness of Bangkok as a place to live as more overseas purchasers are deciding that will eventually more their permanent home to Bangkok.
“This because, in property terms, Bangkok offers great value to purchasers. Luxury property in Bangkok is ten times cheaper than Hong Kong and five times cheaper than Singapore. At the same time, Bangkok offers a high standard of lifestyle, including healthcare, entertainment and retail outlets, as well as hospitality,” said Aliwassa.
The average current price for completed top-end condominiums is in the range of Baht 100,000-Baht 130,000 per square metre, with prices of Baht 85,000-Baht 95,000 for the high-end, Baht 60,000-Baht 80,000 for the middle-end, and below Baht 60,000 for the lower-end of the market. CB Richard Ellis expects that prices will rise in the region of 15%-22% in the next three years. Some projects will possibly achieve higher rates if the products match the sophisticated requirements of buyers at the time.
“We anticipate that the future luxury supply will be limited while demand will continue to be from both local and overseas purchasers. Prices will also rise further, particularly for those developments which meet luxury or investment standards,” concluded Ms. Aliwassa.
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a FORTUNE 1000 company headquartered in Los Angeles, is the world's largest commercial real estate services firm (in terms of 2005 revenue). The Company serves real estate owners, investors and occupiers through more than 350 offices (including affiliate and partner offices) worldwide.
CB Richard Ellis established an office in Bangkok in 1988 and in Phuket in 2004. CB Richard Ellis (Thailand) Co., Ltd. has grown to be a leading real estate services provider, offering a full range of services including sales and leasing for all types of property, property and facilities management, valuation and advisory, and research and consulting. For more information, visit the company's website at www.cbre.co.th .
For further information:Ms. Aliwassa PathnadabutrManaging Director - Thailand+66 2 654 1111
Ms. Ngamjai Jearrajarat Corporate Communications Manager+66 2 654 1111 Ext. 522
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