This year will go down in history as one where the trend of super-luxury developments in Bangkok has increased, and next year will see similar trends according to one real estate firm.
According to research from Nalinrat Chareonsuphong (pictured), Managing Director of Nexus Property Marketing Company, small and large developers have been investing in developing products in this sector of the market. Although overall property market and economic factors have been slowing, it has had far less impact on this segment of the property market.
Land costs has been one of the factors that has driven property developers to shift their portfolios to this product segment. The products comprise two main categories; single detached houses and condominium. Nexus market research covered unit prices of more than THB 15 million for condominiums and more than THB 30 million for single detached houses in inner and outer Bangkok.
Since 2011, new launches of super-luxury residential developments totaled 4,045 units, comprising 1,263 units of outer city houses, 129 units of inner city houses and 2,653 condominium units. During 2015 there were a total of 21 new projects in the luxury residential sector, nine of them were condominium which reached record highs.
Analysing the sizes of luxury residential property, outer and inner city house sizes range between 350 sqm and 780 sqm. The difference is size of land plots ranges between 100 sqw and 400 sqw for outer city houses, and 24 sqw and 120 sqw for inner city house. When compared with condominium sizes of two-bedrooms or more in a similar product range, the usable area of a condominium is around 70 sqm to 120 sqm and up to 700 sqm for a four-bedroom unit. The larger the usable area a unit has, the more distinctive functions there will be. Product development was deeply analysed to meet the requirements of this target buyer.
Nalinrat said: “Players in the market can be categorized into two main groups; large developers focusing on large projects in both condominiums and housing that have been in the market for a long time, and medium-sized developers focusing on niche product developments. They conduct analysis on upper-end customer needs and develop a small-or medium-sized project.
“There are many new developers entering this market as they believe there is demand in this segment. It is not difficult to market the product, and the product is sold to just a fewer buyers.”
Demand
The selling rate of houses and condominiums in this segment launched since 2011 is 53 percent, according to Nexus. The selling rate of outer city luxury housing projects stands at 43 percent, inner city houses at 60 percent and condominiums at 57 percent. The majority of remaining supply is from projects launched this year.
Buyers in this market segment prefer to see a real product, particularly outer city houses which are mostly pre-built units. The main factor driving this segment’s growth is the expansion of new families in various residential areas of Bangkok.
For inner city houses and condominiums, it is the increasing price that creates investment opportunities. Moreover, Nexus added that the foreigner market is another group that has become interested in luxury houses and condos.
Price Range
The price range in the super-luxury segment has increased consistently, driven by product which has becoming more luxurious, together with increases in land and construction costs.
However, price setting for this product segment depends largely on luxury element of the project, details, materials and equipment provided in the project.
One of the most expensive house available for sale right now is Q Twelve, by Q House located on Ratchapruk Road which has a price tag of more than THB 100 million.
For super-luxury condominiums with unit prices starting at more than THB 15 million, Nexus said there were a total of nine projects launched this year with average price of THB 288,000 per sqm, up 18 percent from last year.
Trends
“Next year this market will continue to grow significantly. There will be new projects at price ranges higher than THB 30 million, with new design concept coming to the market.
“More than 10 projects have planned to launch next year from both large and small developers. Prices tend to be higher for new housing styles with different designs and functions that meet customer’s requirements. These projects will be in inner-city in peaceful areas, yet close to luxury lifestyle venues which Nexus believes to be suitable locations for this product,” Nalinrat added.
The market from foreigner buyers and investors will continue to be strong, as property prices in Bangkok remain relatively lower compared with more mature overseas markets.
The main locations for this group will remain Sukhumvit, Langsuan and Sathorn, as they are popular and foreigners are very familiar with these locations.
Besides Sukhumvit and LangSuan, attractive locations next year for high-priced inner city houses will include lower Phahonyothin and Soi Ari, as vacant land plots are becoming rarer yet land costs remain lower than those in the Sukhumvit area.
Prices of outer city houses will tend to rise being driven mainly by cost-push factors. The situation for inner city houses will be similar, while prices of new condominiums will increase at least 10 percent next year, Nexus predicted.