Mr. Frank Khan, Executive Director, Head of Residential, Knight Frank Thailand said in 2016, the overall Bangkok condominium supply increased around 5% from the previous year. Most large residential projects launched in the Peripheral area with a selling price of 45,000 to 55,000 baht per sqm. The highest concentration of supply in the Peripheral area was mushrooming along late Paholyothin, Rattanathibet and Chaengwattana Roads. However, listed developers are planning to launch projects due to recovered consumer confidence stemming from the government’s kick-off of mega infrastructure projects. It is interesting to note that when the BTS line Baring-Samutprakarn opens, developers will launch more projects because the demand is always present in the area.
The Bangkok Super Prime and Prime condominiums’ unit take-up rate is very healthy in CBD areas; Sukhumvit, Ploenchit, Rajdamri, Silom, and Chitlom enjoy rates of around 60 to 75%. Supply in this area is very low due to the scarcity of available land. We will see some super prime and prime projects extend to the Chaophraya riverside area, Charoennakorn. This area has potential due to the massive real estate investment project, The Icon Siam. Such residential projects, including branded residences, on the Chaophraya riverside will be the choice for 2017; this will encourage developers to seek Chaophraya riverside lands, Charoennakorn with beautiful views.
Next year, Mr. Khan forecasted that Sukhumvit, Sathorn, CBD and City Fringe areas would continue to see healthy take-up rates. Condos with the right product specifications, good prices and locations near mass transit systems in inner city areas will enjoy good sales; the prices of such remaining units should go up in 2017. Convenience is the priority of buyers; the project should provide the convenience of living near the mass transit systems, restaurants, supermarkets, hospitals and schools. Condominium of grade B and C near the mass transit and condominium of grade B and B+ in Rama 3 and Riverside areas, Charoennakorn will move fast. One-bedroom units will have more demand and most developers will serve these needs by launching smaller one-bedroom units, which make the final price more affordable.
The selling price of newly launched condominium projects continued to climb in every location, especially the CBD and City Fringe. Land prices in the Peripheral area where the new infrastructure is to be developed will see a sharp increase in land price. Whereas the asking price for land in the CBD is incredibly high, the asking price in the heart of the CBD is more than 2 million baht per square wah. The sharp increase of land cost drives the selling price of condominiums. Currently, the average selling price of Grade A condominiums in the City Fringe is 150,000 to 160,000 baht per square metre, where the average selling price of Grade B condominiums in the City Fringe is 90,000 to 100,000 baht.
Mr. Khan suggested that developers should be conscious about launching projects in Peripheral areas due to the fact that the existing inventory is still high while the demand is not as high as the market expected. Developers should devise the right product with the right price. Condominium projects in CBD and fringe areas will still move forward, with the rental yield of around 4 to 5% for investors.
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For the Pattaya market, Mr. Frank Khan, Executive Director, Head of Residential, Knight Frank Thailand, said the developers have slowed down in launching new condominium projects during 2016. Developers have tried to clear the remaining inventory by offering a guarantee rental return of 5 to 7% during the first three years when the buildings have been completed. Russians were the main buyers in the Pattaya market but the numbers of such buyers have been declining steadily since the Ruble currency crisis directly affected Russian visitors, decreasing their purchasing power. However, the emerging buyers of Pattaya condominiums are Chinese. This reflected the number of Chinese tourists visiting Pattaya, which has increased by 15%, whilst the number of Russian tourists visiting Pattaya dropped by 50%. Chinese investors started buying condominiums in Pattaya for investment.
Mr. Khan forecasted that Pattaya would be a town that has very high potential in the future due to the fact that there are several positive factors concerning Pattaya as a city and Pattaya properties. These include infrastructure developments, which refer to the train from Bangkok to Pattaya, the monorail train in Pattaya city, the Dual Track Train from China to Pattaya, Pattaya-Hua-Hin-BangPoo Ferry, and U-Tapao International Airport. Moreover, Pattaya is close to Rayong, Chonburi and Lamchabang Sea Port that house many industrial estates, which are essential in terms of cargo transportation, tourism and industry development. There are many management level personnel working in the industrial estates in Rayong, Chonburi and Sri Racha. With complete facilities and amenities, such professionals working in said locations will choose to live in Pattaya.
There will be a good sign in residential investment projects; the take-up rate is healthy and sustained in 2017. New projects will always be coming up, including branded residences. While the general condominium market will remain slow, with inventory not selling very well, we haven’t seen any new upcoming projects. We believe that the Pattaya condominium market will recover – but it will take some time.
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Mr. Nattha Kahapana, Executive Director, Head of Knight Frank Phuket, said in 2016, the demand in Phuket’s villa market was good, representing a sold rate of 76%. The highest demand during 2016 was for non-sea view villas located in the southern part of the island, which includes Rawai, Naiharn and Saiyuan. The market is far from the oversupply stage as the villas have been sold off plan; developers also started to construct such villas when they have already been reserved and the buyers have signed sales and purchase agreements. The successful super prime villa project is one that offers the right price in the right location with management by an international hotel chain.
The villa segment that performed well in 2016 is the villa with selling prices below THB 20 million a unit while the absorption rate of a Phuket luxury villa (priced over THB 100 million a unit) is slow. The average selling price in the secondary villa market increased sharply, while the primary villa market remained stable. The Phuket villa buyers are Europeans from France, Germany and England. Australians are also major buyers, with an increasing number of buyers from Singapore, Hong Kong, Mainland China and Taiwan.
For the Phuket condominium market in 2016, the market condition improved with the annual unit take-up increasing. The accumulated sold rate is the highest since 2007 at 68% with the average price rising by 3.5% from 2015. In terms of sales, Patong and Kalama were the top selling beaches in terms of units sold —in particular, newer one-bedroom (mostly) seaview projects enjoyed the fastest pace of sales. Previously, the majority of Phuket condominium buyers were either expatriates based in East and Southeast Asia, or Western Europeans who wished to have a second home for their own use during the European winter. This year, similar to last year, there has still been an increase in Chinese, Taiwanese and Singaporean buyers. Russian buyers are also back in the market after having been mostly absent due to the Russian currency crisis. We also saw affordable projects starting to prioritise their sales strategies to cater to the Chinese market with printed materials at sales gallery available in Mandarin.
Mr. Nattha forecasted that the market will see massive investments from both the private and government sectors; with the recent completion of the new International Terminal at the Phuket Airport, the currently under-construction Central Festival Phuket expansion, the proposed development project of Blu Pearl by The Mall Group, and the upcoming planned transport infrastructure upgrades, Phuket would enjoy a better market outlook in the following year.
There is growing demand for professionally managed properties in 2017. In the near future, we will see more launches of super prime villa projects that will be managed by international hotel chains as well as more upper condominium projects being introduced into the market. However, as land is becoming scarcer, the sales price of the condominiums would also gradually increase in time. It is interesting to note that the Phuket condominium market will transform similarly to what we have already seen in Bangkok. Developers are choosing to reduce the unit sizing to lower the unit price, making their projects more attractive to buyers from emerging markets.
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