Thailand-Property

Strong demand for prime projects

Demand for prime residential projects in central Bangkok is expected to remain strong, according to real estate firm JLL in its Asia Pacific Property Digest for Q3.

JLL said that almost 5,300 units are expected to complete within the next 12 months in the central business areas (CBA) of Bangkok, equivalent to 16 percent of current stock. With more than 88 percent of these units already pre-sold, JLL said it expects the overall unsold rate in the CBA to remain in the low single digits throughout the next 12 months.

With a small amount of new apartment supply in the pipeline and healthy competition between luxury apartments, the condominium rental market and traditional serviced apartment market, JLL said that it expects rents in all sectors to grow very slowly, with yields compressing slightly.

“Luxury condominiums in prime locations of Bangkok remain highly desirable despite the weak economic outlook”, said Andrew Gulbrandson, Head of Research, Thailand for JLL.

Four new projects were launched during Q 3 of 201515 with a combined pre-sales rate of 68 percent at the close of the quarter. One of the four projects, The Line Sukhumvit – developed by a joint-venture between Sansiri PCL and BTS Group, sold out completely within days of launch owing in part to healthy pre-sales generated from road show events in Hong Kong, Taiwan and Singapore.

Six projects were completed in Q3 and achieved a combined sales rate of 90 percent upon completion. Of these projects, those located in desirable neighbourhoods and those near mass transit achieved the highest sales rates.

Sounding words of caution, JLL reported that of the eight condominium projects that were scheduled to complete during the quarter, two were delayed because of labour shortages following a pattern seen frequently in recent quarters. The six new high-end projects that completed in the quarter added 997 units to the existing stock.

New luxury apartments, The Willows and Monet House were launched in Q3 and resulted in the total apartment stock rising to 4,303 units. The vacancy rate in the apartment sector rose from 6.2 percent in Q2 2015 to 7.3 percent in Q3 2015, largely as a result of the new supply coming on line.

Gross rents for condominiums edged down by 0.2 percent quarter-on-qyarter (q-o-q) to THB 515 per sqm per month. Apartment rents declined by 1.1 percent q-o-q to THB 359 per sqm per month. Capital values remained at THB 111,225 per sqm in Q3 2015 according to JLL, with market yields remaining generally stable.

JLL reported that Sansiri purchased a 3,344 sqm site on Sukhumvit Soi 38 for THB 1.42 billion and a 7,022 sqm site on Pradipat Road for THB 1.3 billion, while divesting a 3,013 sqm plot near BTS Onnut to BTS Sansiri for THB 828 million. SC Asset bought a development site in Thong Lor for THB 428,000 per sqm and Richy Place acquired a project under construction on Sukhumvit Soi 49 from Woraluck Property valued at THB 945 million.

Note: JLL said that Bangkok Residential refers to Bangkok’s Central Business Areas (CBA) high-end and luxury residential market.

To read the full JLL Asia Pacific Property Digest for Q3 click here.