Mr. Phanom Kanjanathiemthao, Managing Director, Knight Frank Thailand Co., Ltd., said that in 2017, the projects that slowed their sales efforts at the end of 2016 would gradually launch their projects in the first half of this year. The Fringe Area of Bangkok holds good potential in terms of development opportunities, with sustained demand amid limited supply of available land for development. Projects in this area have high sales prospects and prices may be on an upward trend.
Graph 1: New and Existing Supply of Condominiums in Outer Sukhumvit, 2009-2016
Source: Knight Frank Thailand
The outer Sukhumvit Road condo supply (from Sukhumvit 71 to Bangna), in the past three years, increased by approximately 4,000 to 5,000 units on average each year. In 2016, there was an increase in supply of 4,832 units. The new supply in the past three years have fewer units as most of the newly launched development projects encompassed buildings with smaller unit-to-building ratios. On average, projects launched from 2012 to 2013 each contained 465 units while from 2014 to 2016, the average number was 302 units. From 2016 data, this area had a new supply of 4,832 units, 64 per cent of which are from high rise projects. In the meantime, 36 per cent of this new supply is from low rise projects. When looking at the grade of the condominiums, it was found that most condos in this area (41 per cent of the total supply) are in the Grade B category, followed by condominiums in the Grade C category (37 per cent of the total supply). The remaining 22 per cent of the supply are Grade A condominiums; this category saw a larger increase in supply than in 2015, where the Grade A condo supply only comprised 15 per cent of the total supply in the area. This increase reflects that the area has potential to grow in terms of sales pricing. Since the end of 2015, it is worth watching the growth in Grade A condominiums in the fringe of Sukhumvit.
Graph 2: Segmentation of Condominium Supply by Low and High Rise Buildings in Outer Sukhumvit & Segmentation of Condominium Supply in Outer Sukhumvit by Grade, 2016
Source: Knight Frank Thailand
In 2016, the accumulated demand for condominiums in the outer Sukhumvit area was 33,133 units, with a total accumulated supply of 40,823 units. This represented an accumulated sales rate of 81.2 per cent, which marks a slight decrease from the same figure in 2015. When looking at the year-on-year demand, it was found that there were 3,771 units sold in 2016; this figure reflects a decline in sales from the previous 4 to 5 years. This can be mainly attributed to the slowing down in developers’ marketing efforts towards the end of the year, which negatively affected condominium sales in 2016. At any rate, the new supply in each year has not exceeded the demand by much. Along with the high rate of cumulative sales, this demonstrates the high potential of the area.
Graph 3: Demand, Supply and Cumulative Sales of Outer Sukhumvit Condiminiums, 2010-2016
Source: Knight Frank Thailand
The price level of condominiums in outer Sukhumvit (Soi 71 to Bangna) had a compound annual growth rate (CAGR) of around 9.78 per cent per year. In 2016, condominiums in outer Sukhumvit reached the peak price of 163,673 baht per square metre, while the lowest price was 74,150 baht per square metre. The average selling price in the area was 101,493 baht per square metre. When comparing the increase in prices, it was found that the prices have risen significantly. Condominiums priced at 85,000 baht per square metre are considered to be of good value, when compared to the rest of the market. There is also room for such prices to rise in accordance with average price rises in the overall area.
Graph 4: Levels of Minimum Prices, Average Prices and Maximum Prices of Condonomiums in Outer Sukhumvit, 2011-2016
Source: Knight Frank Thailand
Mr. Phanon added that The Niche Mono Sukhumvit 50 project, comprised of two 8-storey buildings with 434 fully furnished units, has a starting price of 2.2 million or 82,000 baht per square metre. When compared with the average prices in the market, this price is reasonable and of good value for investment or for residential purposes. This is augmented by the project’s additional selling points of solar cell panels, which foster energy conservation and lower common area fees related to electricity usage for the owner over the long run; after-sales service by Sena; 24-hour online building maintenance support; and a sales and rental service.
