Bangkok’s property and real estate sector during 2016 will be focused on luxury projects, and be dominated by what CBRE Thailand has called “selective buying”.
Downtown Bangkok will continue to be the most sought-after address it concluded in its Bangkok Real Estate Outlook for 2016 report, which was published earlier today (Wednesday).
It said that unlike the midtown and suburban areas of the city where there are more than 400,000 completed units, the downtown condominium market in Bangkok is a low volume, high value market.
The real estate firm said that it expects to see the prices for new launches in prime downtown areas continue to increase during 2016. It said that because there are so few vendors willing to sell prime plots of land, intense competition among developers has resulted in increasing land prices. CBRE added that it believes this will further push prices higher in the best downtown locations in Bangkok during 2016.
In contrast, CBRE expects that the overall Bangkok condominium market will be slow during 2016 as a result of the sluggish economy, Despite this, it said the number of new projects will be roughly the same or slightly higher than those seen during last year.
It reported: “The risk during this economic slowdown is that not every project will be able to capture the buyers’ imagination in terms of location, specification and quality to justify high asking prices, and there is only a small pool of potential buyers who can afford these luxury projects.
“Therefore, the key for developers during 2016 is to focus on developing the right product in the right location at the right price. Only projects that manage to do so will be able to succeed.”
Less prime locations will be harder to sell and will likely face strong completion in a market where buyers remain less confident, it added.
Resale condominiums, especially good quality ones, will be an exciting area to watch in 2016.
“With the prices of newly launched condominiums reaching almost five times higher than some 20-year-old condominium projects in similar locations, CBRE Research believes that (resale) prices in older buildings in the best locations that have been well-maintained will still rise, especially for the larger two- and three-bedroom units that have limited new supply.
“The demand will come from buyers who are looking for large condominium units, but cannot afford the record-breaking prices of newly launched projects.”
CBRE added that during 2015, 80 percent of units with prices of more than THB 200,000 per sqm in downtown Bangkok were purchased by Thais, and it does not expect this to change dramatically in 2016.
