Plus Property Finds Demand Surges in Downtown Bangkok. Phuket - Hua Hin Holiday Condos Still Going Strong Resale Condo Market Growing Before the new LTV limits will be applied
01 Feb 2019
plus news and update
Plus Property Company Limited, the full-service professional property and facility management agency, reveals that the condominium market continues to grow because of real demand for residency as well as demand from investors. Figures going back 4 years for the inner Bangkok areas of Phloen Chit and Chit Lom reveal an almost 80% growth in demand and close to 20% growth in supply. Over the same period, demand within the Sukhumvit area grew roughly 50% and supply grew 30%. Demand growth was an astounding 570% and supply growth was 240% in the Phaya Thai-Ratchathewi area. Condos at resort cities such as Phuket and Hua Hin continue to be driven by public infrastructure development. The resale condominium market – offering advantages such as lower prices and higher tangibility than projects under construction – is expected to become energized in early 2019 as buyers hurry their purchases before the new LTV limits takes effect.
Mr. Anukul Ratpitaksanti, Managing Director, Plus Property Company Limited, the full-service professional property and facility management agency, revealed that based on findings from Plus’s research and strategies development division, the residential market is continuing to expand. This is especially true for properties at central business districts and nearby zones that are serviced by the electric train, where people generally prefer to live. The expansion of the urban area and the increased coverage of mass transit has resulted in an expansion of the market for residences and its foray into several new areas. The condominium remains the type of residence with remarkable growth; prices of land along the mass transit lines and their extension routes have consequently risen and prompted increases in the prices at new condominium projects. In addition to factors related to transportation, areas in the vicinity of the electric train also have the characteristic of being centre of commerce. Community malls, career hub and buildings also contribute to heightened demand for condominiums in the said areas.
PLUS’s compilation of data over the four years period between 2015 and 2018 revealed that demand for the Sukhumvit location grew by roughly 50% whereas supply only grew by 30%. Demand for the Phaya Thai-Ratchathewi location grew by an astounding 570% whereas supply grew by 240%. The limited supply was due to the low number of available projects and the lack of any new project launches in certain years. This situation meant that demand would rise exponentially whenever a new project goes on sale. For the Phloen Chit-Chit Lom zone, demand grew by an average of 80% while supply grew by 20%. These figures reflect how demand has significantly outgrown supply. This imbalance resulted mainly from the limited space available for developing new condominium projects in Bangkok’s inner zone and in central business districts. Despite there being high demand from potential buyers, development of new projects was difficult. To this end, resale condominiums units at projects that have already been completed are seeing an attractive growth, due to their ability to provide solutions to the demands from those who want to live at downtown locations. For projects in the Phaya Thai, Asok and Sukhumvit zones, a condo unit at a new project has a price that is almost 10% higher than one at a resale project. Within these zones, resale prices remain lofty and therefore there is less of a difference between the prices at new and resale projects, unlike the gap between said prices at projects located in Bangkok’s outlying areas.
One contributing factor for the everlasting popularity of inner Bangkok condominiums is return on investment; capital gain and rental yield are similarly high for inner Bangkok. Projects producing returns that are higher than the average return are generally properties in Sukhumvit and outer Sukhumvit areas where total return is about 10% per year, with a tendency to increase continually. It should be noted, however, that projects that recently launched within the past 2-3 years produced less capital gain. It can be reasoned, then, that prices of new projects have been increasing each year. In order to profit from a price difference, an investor may need to hold the property for at least 3 years while accepting a rental yield of 4-6%. However, overall return will eventually increase because of the forecasted tendency for an ever-increasing price level.
The expansion of urban areas and the state sector’s propagation of infrastructure and transportation projects towards major tourism cities are also important driving forces for the growth of the condominium market. This is especially true for the Phuket zone where projects exist for the development of Phuket Airport’s third phase, the Phuket Smart City, and the transportation infrastructure. Said developments will accommodate the future growth of Phuket City. Owing to these developments, prices of condominiums in Phuket have been rising over the previous 3 years – the rise was 12%, on average. Demand for real estate in the Hua Hin locale has also been rising overall. The zone will benefit from improved transportation linkages with Bangkok in the forms of a high-speed rail link and a motorway. The said transport links coupled with the area’s existing livability factor to drive up demand for real estate in Hua Hin. The price of land in the 2016-2019 accounting cycle increased by almost 30% from the 2012-2015 cycle. Meanwhile, prices in the resale market have continually risen over the past 5-6 years. The return made from reselling a condo unit was as high as 60% while return from rent still yielded a hearty 4-5% per year. Thus, condominiums in holiday hotspots remain an equally enticing choice.
“Our prediction is for completed condominium projects to become revitalised through the resale scene in early 2019, before the Bank of Thailand’s LTV (Loan to Value) reduction measure takes effect in April. The resale units present a better choice because the layout of the condominium and the condition of the room can be promptly inspected – another advantage being that the units are also ready to move-in as well as ready to earn income – for investment. Also, developers are currently releasing special promotions and this presents a good opportunity for people who want to purchase property before the LTV reduction measure comes into force, in order to benefit from prices that will increase in the future”, said Anukul.
Plus Property is a full-service professional property and facility management agency. With more than 20 years of experience, PLUS manages residential and commercial properties through its team of quality professionals, heeding to all types of demand.
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