In an otherwise lacklustre condominium market, Bangkok’s luxury sector is feeling pretty hot right now.
While demand for condos and purchasing power in the mass market at the end of 2015 was lower than expected, the luxury market has emerged as the one to watch, according to a new report from Colliers.
Many luxury condos are due to be launched this year, particularly in the city and Sukhumvit areas. Sukhumvit Sois 21 to 55 are right at the epicentre of this high-end development blitz with many unit starting prices expected to reach over ฿200,000 (US$5,600) per square metre.
As is to be expected, premium properties in Bangkok are generally found along the existing mass transit lines of the BTS and MRT. Many developers are also exploring their options along the proposed mass transit line extensions too, and we can expect much growth in these areas as the extensions come to fruition.
Purchasing power among Thais, however, is currently low thanks to the unfavourable economic environment. As such, large developers have been focusing on foreign buyers instead, taking launches on roadshows to Hong Kong, Singapore, China and Malaysia, in order to target wealthy investors who fancy a slice of the Bangkok luxury market.
It is thought that as the the Thai economic situation hopefully improves over 2016, demand from local wealthy investors for luxury real estate will increase too. As it stands, factors like high household debt, poor export performance and macroeconomic issues have seen many Thais spending less and not buying property that will add a further burden of long-term debt.
Looking at the mass condo market as a whole, it’s clear that there is a slowdown: less than 6,000 units were launched in Q4 2015 and the total number of newly launched condos over the last year was 30 percent less than in 2014.
Prices, however, are on the incline thanks to the dominating force of the high-end sector: the average price of the new condos launched last quarter was ฿120,600 (US$3,400) per square metre – a 25 percent increase on Q3 2015. This reflects the sheer number of new luxury projects launched.
The outlook for the rest of 2016 is much the same as 2015: demand and purchasing power will be similarly low until the economic situation improves, and foreign buyers will continue to be wooed for high-end projects. The main players are developments on or near mass transit lines and their proposed extensions.
Featured image is by Roberto.Trombetta and used under a Creative Commons licence