Ms. Risinee Sarikaputra, Director of Research & Consultancy, Knight Frank Thailand Co., Ltd., said that the super prime and prime condominium market in 2019 is still good as the added supply has been low. The super prime and prime condominium market segment is small, comprising just 2 per cent of the overall condominium supply in Bangkok. Growth in this segment is relatively low as developable land in prime locations is quite difficult to source.
According to Knight Frank Thailand Research, it was found that, at the end of 2019, the cumulative supply of super prime condominiums included 3,866 units from 28 projects. In 2019, three super prime condominiums were launched: Tonson One Residence (80 units), SCOPE Langsuan (152 units) and The Residence at Sindhorn Kempinski (231 units). The cumulative number of super prime condominium units sold was 3,012 units from a total supply of 3,866 units, which reflects a 78 per cent sold rate. This marks a decrease of 1 per cent from the previous year. The number of new super prime condominiums sold in 2019 was 314 units, which was lower than the previous year where 404 such units were sold.
As for prime condominiums, the cumulative supply stands at 4,696 units from 21 projects. In 2019, only one condominium in this group was launched: Anil Sathorn 12 (222 units). The cumulative demand for such condominiums, as of the end of 2019, was 3,412 units sold from a total of 4,696 units, representing a sales rate of 73 per cent. Sales increased from the previous year, which was at the rate of 68 per cent. In total, 361 new units were sold in 2019, which is a decrease from the 558 new units sold during the previous year.
Miss Risinee remarked that customers who bought super prime and prime condominiums included wealthy Thais and expatriates, mainly Mainland Chinese, Hong Kong Chinese and Singaporeans. Buyers generally purchase condominiums in this segment as they are located in the Central Business District and along the Chao Phraya River, which are convenient, comfortable, close to amenities, shopping malls, tourist spots and work sites. These locations also afford easy access to various parts of Bangkok.
Demand for super prime and prime condominiums in 2019 remained good, as the supply did not increase much. This caused the sales rate to increase slightly. The prime condominium market was still good despite the economic downturn, as they can still provide higher rental returns than super prime condominiums. Prime condominiums still yielded rental returns of around 4 to 5 per cent, while super prime condominiums offered lower returns, estimated to be less than 3 per cent. In addition, it was found that, to boost sales, some prime project units have been presented for sale at a special price below the market rate. This piqued the interest of some groups of investors who have bought units in the prime segment to hold onto until the economy improves.
The super prime condominiums are mainly located in the Sukhumvit area, which accounted for 47 per cent, followed by Lumpini and Riverside at 27 per cent and 21 per cent, respectively. The Sathorn / Silom area only boasted 5 per cent of the super prime condominiums.
The prime condominiums are mainly located in the Sukhumvit area, which accounted for 37 per cent, followed by Sathorn / Silom and Lumpini at 29 per cent and 26 per cent, respectively. The Riverside area only had 8 per cent of the prime condominiums
The average selling price of super prime condominiums at the end of 2019 was 395,000 baht per square metre, up 4.5 per cent from 2018; the average selling price of super prime condominiums in 2018 was 378,000 baht per square metre. Meanwhile, the average price of prime condominiums at the end of 2019 was 295,000 baht per square metre, an increase of 3.5 per cent from 2018, where the average selling price was 285,000 baht per square metre. The price increased sharply due to the high price of land required for super prime and prime condominium development. Aside from rising land prices, the construction costs of super prime and prime condominiums have also been rising because developers employ construction standards that use quality materials with a focus on energy saving and various innovations – helping to differentiating the projects. Therefore, new projects launched for sale have a much higher asking price than the average price of such condominiums.
Outlook for Prime and Super Prime Condominium Market
The prime and super prime condominium market appears as if the level of competition is not too high, as the land available for development of such condominiums is very hard to source. However, in 2020, the new supply may require close monitoring, as does the adjustments made by developers as well as the transformation of the market into a buyers’ market. Also, it is worth watching the prices amidst the current economic situation in the country and the world that is poised for contraction and negative growth. The possible outlook includes the downward adjustment of selling prices of existing projects and the slowing of new project launches. This is all dependent on the duration of the COVID-19 pandemic as well as the economic prospects during the fourth quarter of this year. Demand and the desire to purchase prime and super prime condominiums may decrease significantly, especially among foreign buyers.
