Research from real estate firm Plus Property has revealed that average prices for new property launches in Bangkok during the first half of 2015 rose by a staggering 35 percent – while the number new launches actually declined by 21 percent over the same period.
The reason for the price hike – Thailand property developers have been turning their attention to he medium- and high-price segments in ever greater numbers.
New projects posted a sell-through rate of 61 percent – almost equal to the 60 percent reported in 2H 2014. Midtown zones like PhraKhanong, upper On Nut, Ratchada Ladphrao, Chatuchak and Bang Sue posting the best rates at 87 percent.
According to Plus the market is expected to be stable during the rest of this year, while the high-end segment will continue to show lively activity thanks to consistently strong purchasing power across its customer base.
“The first half of 2015 saw 44 new condominium project launches in Bangkok, comprising 20,052 units and representing a 21 percent decline from the second half of 2014,” said Poomipak Julmanichoti, Managing Director of Plus Property.
“Demand during the first six months accounted for sales of 12,165 units, representing a sell-through rate of 61 percent.New-launch prices have risen by 35 percent from THB 97,000 per sqm to THB 131,000 per sqm.”
Units priced in the THB 100,000 per sqm to THB 200,000 per sqm range were the top performers with a sell-through rate of 84 percent, followed by the THB 200,000 per sqm plus at 60 percent. Last was the THB 100,000 per sqm and lower which recorded sell-through rates of 49 percent.
A zone-based analysis discovered midtown Bangkok areas such as PhraKhanong, upper On Nut, Ratchada Ladphrao, Chatuchak and Bang Sue were the top sellers with an 87 percebt sell-through rate, largely driven by convenient mass-transit connections, moderate prices that are lower than inner Bangkok developments, a burgeoning rental market with higher returns compared to inner Bangkok, and a wider customer base covering both cash and loan buyers with no household debt issues and high loan approval rates.
Inner Bangkok zones, such as Rama IV, Silom, Sathorn, Ratchathewi, Phayathai, Asoke, Petchburi and upper Sukhumvit came second with a 60 percent sell-through rate, while outer Bangkok covering Bangna, Thonburi, Don Muang nd Minburi recorded a 46 percent sell-through rate.
While inner Bangkok developments did not post the best sell-through rate, many projects successfully sold their entire supply of units within a matter of days – including The Monument Sanam Pao, Nimit Langsuan, Klass Siam, and Ashton Residence 41. These sellouts indicate the excellent health and strong demand for the luxury segment.
Plus added that the low sell-through rate was likely caused by projects with feature mismatches such as unit size, material choices, unit designs, or developer reputation – and demand.
It must be noted that consumers today are remarkably savvier when it comes to choosing a condominium project, Plus noted, and developers now find it necessary to conduct a thorough analysis before putting a new project on sale. If the analysis proves accurate, the result is fast sell-through rates as seen at the aforementioned developments.
“The property market in the second half of 2015, especially the condominium segment, will likely show stable but unspectacular growth due to the gradual economic improvement,” concluded Poomipak.
“Regardless, high-end projects are likely to perform best as customers in the segment still have strong purchasing power. The increasingly limited availability of projects in this range will also spur demand across all buyer types.
“One key factor that developers need to consider is how their project designs match up with the needs of buyers in each area. Zones with high rental demands often have difference styling preferences compared to areas with high proportions of residential buyers, and developments that successfully align their designs with these needs have a high chance of success,” he said.
Image: Crowds at a recent Bangkok property launch.
