Mr. Frank Khan, Executive Director and Head of Residential, Knight Frank Thailand Co., Ltd., said, “2016 was another outstanding year for Bangkok’s prime and super prime condominium market, with strong demands and high price growth despite the spill over effect from the slowing Thai economy. On the supply side, developers with land banks in prime areas found the segment to be more suitable for development, which could generate relatively higher than average return on plots with higher land acquisition costs. On the demand side, buyers in this segment were mostly affluent individuals that mostly do not rely on home loans. Moreover, there’s a lot of demand from Hong Kong buyers in this segment.”
He added, “This year, it is expected that this particular segment would still enjoy overall growth but at a much slower pace of sales. The selling price, on the other hand, would continue to climb given the limited land stock available for development—and as other real estate asset classes, such as offices and hotels, are becoming more appealing to developers. The super prime market showed strong growth in supply especially within the Sukhumvit, Central Lumpini, and the Chao Phraya riverside area on Charoen Nakorn. Demand was remarkable despite showing signs of slower growth compared to 2015, as price levels reached a new high, especially for the Sukhumvit area”.
Supply Trend
According to Knight Frank Thailand’s research, this year, six Bangkok condominium projects have been added to Knight Frank’s Bangkok prime and super prime condominium lists. Prime Sukhumvit retained the largest share of the market in terms of supply with 597 units entering the market—236 of which belonged to the super prime market. These units are from Khun by Yoo on Sukhumvit 55 (Thonglor) and Vittorio on Sukhumvit 39 (Phrom Pong). Central Lumpini on the other hand saw 513 new units entering the market from two super prime projects: 98 Wireless on Wireless Road and 28 Chidlom on Chidlom Road. None of the new projects from the Sathorn and Riverside areas qualified as either a prime or super prime project this year.
Figure 1: Accumulated Supply of Prime and Super Prime Condominiums
Source: Knight Frank Thailand
Demand Trend
The prime and super prime condominiums remained the most resilient sector of the Thai property market, with strong demands and price growth when compared against the overall Bangkok and Phuket markets. For the prime segment, the accumulated sold-rate at the end of the year stood at 75.4% with 382 units sold. For the super prime, the accumulated sold-rate fell the second year in a row to 53.6% from 59.3% at the end of year—despite a very high number of first-hand transactions (284 units sold this year). Mostly responsible for the fall in the sold-rate were two projects which were not able to commence a full project launch and promotional campaign following the national mourning period from the passing of HM King Rama IX—these include 28 Chidlom (with 436 units) and Vittorio (with 88 units). If we were to base the sold-rate without these two projects, the accumulated sold rate for 2016 would have been 66%.
Figure 2: Prime Condominium Demand, Supply and Accumulated Sold Rate
Source: Knight Frank Thailand
Figure 3: Super Prime Condominium Demand, Supply and Accumulated Sold Rate
Source: Knight Frank Thailand
Price Trend
In 2016 we have witnessed a slowing growth in the average selling price per square metre in both prime and super prime markets. Prime condominiums saw a 5.93% year-on-year price increase whereas the super prime saw a 3.90% increase. The current average selling price for prime and super prime units is approximately THB 268,980 per sqm and THB 352,136 per sqm, respectively. Despite the slowing in year-on-year growth, the prime and super prime condominiums still significantly outperformed Bangkok’s overall condo market pricing level.
Figure 4: Average Selling Price per Square Metre of Bangkok’s Prime and Super Prime Condominiums
Source: Knight Frank Thailand
A closer look at the 2016 price data shows that the Central Lumpini area saw the highest year-on-year price growth of 9.89% following the launch of 28 Chidlom and 98 Wireless; the latter broke Bangkok’s price record at THB 750,000 per square metre (based on the first party report by the developer). This is followed by the Prime Sukhumvit area, which saw 8.10% year-on-year growth in price. The Riverside and Sathorn areas saw a year-on-year price growth of 3.14% and 2.78%, respectively.
Figure 5: Central Lumpini vs Prime Sukhumvit in 2016
Central Lumpini Sukhumvit
Product Trend
Ms. Anchalee Kasemsukthawat, Director, Residential Department, Knight Frank Thailand Co., Ltd., commented that “leading developers have put in more effort to create a unique selling point for each of their prime and super prime projects. In 2016, full height floor-to-ceiling windows and see-through en-suites come as standard even in the entry level units. Some include an internet of things-enabled home automation system. More prominently, many of the year’s prime projects now have affiliation with renowned designer brands—for example: Khun by Yoo on Thonglor is marketed as a renowned designer Philippe Starck inspired development whilst Laviq on Sukhumvit 57 is using luxury Fendi Casa products to furnish common areas. All of these were effective strategies to justify higher per square metre pricing relative to older comparable products in similar locations.”
Location attributes were also heavily leveraged into the product designs. The 2015-2016 projects in Thonglor area were often marketed as young, daring and energetic to appeal to the affluent young professionals whom frequent the area. In the meantime, projects in the Central Lumpini area tended to have a more contemporary design to appeal to a broader target group.
