Plus Finds Appeal in Townhomes in H2 as Product Group Is Not Severely Affected
08 Sep 2020
plus news and update
- Plus Property finds the townhome market to be an attractive group within the overall property market as it was only slightly strained. Townhomes cater to real demand arising from buyers’ behavior in the ‘new normal’ era when more living space is sought, while their prices are affordable compared to condominiums and detached homes.
- The 3-5 million baht price range is receiving the most response, especially in locations that have access to the expanded stretches of electric train lines or other transportation boons. People are dispersing outwards to the suburbs where property prices were not yet out of reach and purchase decisions are more feasible.
- Project launches are still taking place in areas hosting the expanded sections of the Green Line and Red Line trains, while townhome demand is expected to increase in the northern area of Bangkok – Don Mueang, Sai Mai, Pathum Thani, Lam Luk Ka and Lat Lum Kaeo.
- Any lifting or relaxation of the 3 million baht price ceiling on residential properties in the government scheme to stimulate the real estate market by reducing the transfer fee and mortgage registration fee to 0.01% would encourage decision-making in a wider circle of consumers, as the scheme approaches expiration.
Ms. Suwannee Mahanarongchai, Deputy Managing Director, Business Strategies and Asset Management, Plus Property Company Limited, the full-service professional property and facility management agency, revealed the findings from a survey on the overall picture of the townhome market by Plus Property’s research and development division.
It was determined that although the townhome market was under the influence of the overall condition of the entire property market, the effects were not overly severe when the overall of the economy and the market were considered. Sales declined to 12,248 units or 39% of available supply, compared to a range of 40-45% over the previous 5 years.
Meanwhile, the trend for townhome sale and purchase is expected to improve during the remaining period of this year (2020) as the townhome market is deemed to have maintained its attractiveness. This is especially true for suburban locations that have access to upcoming electric train lines or the extensions of existing lines.
Townhomes are considered a substitute product for detached homes whose prices have risen to a lofty level. They also appeal to people who do not want to live in condominiums, especially considering how diminishing availability of land for development means that new projects have lately been launched with reduced unit space and higher pricing.
Townhomes situated no more than 2 kilometres from a mass rapid transit station are being priced at 4.59 million baht on average, which is similar to the current pricing of condominiums. Development sites are usually found along the border between Bangkok and its peripheral provinces. It can be said there is just a slight difference in price and location between townhomes and condominiums.
It has been found that townhomes priced at no more than 3 million baht have become an attractive price group for consumers; there were 21,298 units within this group (66% of total units available). The second most prominent price group involves townhomes priced between 3 and 5 million baht; there were 8,344 units within this group (30% of all units).
Townhomes priced no more than 2 million baht have gradually disappeared from the market as they become difficult to develop because of the higher land cost. Newly launched townhome projects usually have a price tag exceeding 2.5 million baht; projects that currently offer townhomes at 2 million baht are scattered further away in the suburbs or along the outer rim of Greater Bangkok, meaning that commutes downtown will take more time.
Data has revealed that townhomes in the 3-5 million baht price group had the highest appeal among buyers, generating sales of 45% – the highest among all price ranges. Properties at such developments are usually situated in the vicinity of an electric train line and thus offer the buyers with the ability to commute to downtown workplaces within having to spend too much time.
Amenities such as malls, educational institutes and hospitals are available near each of the development projects, lending to their appeal towards buyers who are mindful of future family expansion. Nonetheless, this price group of townhomes has also been strained by this year’s economic slowdown and sales have dropped by 11%.
The decline is lower than the 18% experienced by the overall market and both figures were considered to be less forceful than the decline experienced by properties in the condominium category. The contraction for townhomes is also expected to be short-lived, as the demand for townhomes has clearly been growing over the past 5 years.
In the meantime, mid- and high-tier townhomes with prices exceeding 5 million baht are generating slow sales; this can be attributed to the fact that the main customer group consisted of small and medium business entrepreneurs who have been heavily afflicted by the economic downturn.
Locations experiencing healthy growth were those that were host to expansion projects for mass rapid transit lines. The Red Line and Green Line are being expanded to serve Pathumthani, and service on the Green Line is expected to commence at the end of this year. New supply of 6,497 units has therefore entered into this zone – a 44% increase compared to the same period of the previous year.
Certain locations are now attracting developers of low-rise residential properties, including townhomes and detached homes. One such location is the ‘new’ Krungthep Kreetha area that is considered newly accessible. The locale has road links to Ramkhamhaeng, Rama 9 and airports. The Bang Na area, which is receiving windfall from the Eastern Economic Corridor (EEC) project, is another such location.
The Ram Intra locale and other locations situated along electric train expansion lines or the Outer Ring Road are also attracting developers with their special transportation linkages with the inner city.
“The townhomes might not be as a hot market as in the previous year, but the effects being had on this group is not very severe when the entire picture of the property market is considered. Headways can still be made and there is opportunity to be had from the positive factor of consumers, especially first jobbers, shifting their demand from condominiums to townhomes – the reason being the increasing gravitation of work arrangements towards the work from home model.
The townhome market addresses the group of buyers making the purchase for real residency, offering accessible prices and viable amounts of space. This market is benefiting from the expansion of electric train routes that will start to come into service at the end of the year, as well as the expansion of road infrastructure that is giving rise to new areas with convenient linkage between the suburb and downtown.
The direction of residential property sale and purchase is believed to experience improvement from the first half of the year, owing to domestic economic activity that is expected to gradually recover.
The state sector has issued measures for the stimulation of the property market, notably the reduction of property transfer fee and mortgage registration fee to 0.01%. The price ceiling for a property that qualifies for said measure was established to be 3 million baht and properties priced higher than 3 million did not qualify.
The stimulus could become potent medicine if the state was to annul or do away with the 3 million baht price ceiling for the residential properties group. If the funds could be increased for the special fixed interest rate mortgages and access to said mortgages expanded, and if tax incentive measures similar to the first home buyers scheme could be issued, they would likely encourage purchase decisions within a wider circle of consumers”, said Suwannee.
Related news:
Plus Proposes 6 Locations for Detached Houses Responding to Real Demand
Plus Flags Ekkamai as Superb Rental Market for Expats and Office Workers
PLUS Undeterred by COVID-19 Readies Its Buy-Sell-Rent Business for a New Normal
Plus Property is a full-service professional real estate agency that provides comprehensive assistance in reselling/letting properties and the purchasing of second-hand condominium units. With more than 20 years of experience, PLUS’s team of quality professionals manages residential and commercial properties and also manages projects’ sales and marketing, heeding to all types of demand. For additional information about our services, call 02 688 7555, or click here.
02.688.7555