Bangkok has witnessed a swift return to normality following the events of May, according to DTZ’s Property Times Bangkok report – the first real estate agency report to appear reflecting activity during the third quarter of the year.
There has been a quick rebound across all major property sectors, the real estate firm reported, with Thailand’s economy rebounding in Q2 with 0.2 percent year-on-year (y-o-y) growth.
GDP growth turned positive in the second quarter and was largely supported by a 0.2 percent y-o-y increase in private consumption after a y-o-y contraction of 3.0 percent in Q1.
The new interim government which was installed in early September bodes well for business sentiment, and will pave the way for reforms.
In terms of Bangkok’s residential property market, the second half of the year started on a positive note as more condominiums were launched in the central business district (CBD).
Buyer attention in Q3 has shifted back to downtown locations as developers resumed launches of projects which were previously held back due to the political disruptions, said the report.
A handful of prominent projects were launched across the major condominium zones, with the bulk located in Sukhumvit. Some 1,830 units were launched in Q3, of which 43 percent were in Sukhumvit, followed by 37 percent in the central area and 20 percent in the Riverside zone.
The level of take-up among these newly launched projects was surprisingly strong, according to DTZ, with some projects closing sales within days of launch. The brisk rate of absorption suggests the strong preference for CBD condominiums despite higher prices.The average launch price rose 12.2 percent quarter-on-quarter to THB175,000 per sqm in Q3 from THB156,000 per sqm in Q2.
The lack of suitable land plots in CBD locations (particularly in the Central, Sathorn and Sukhumvit zones) and rapidly rising land prices have been attracting land acquisition activity by the major listed developers.
Similarly, condominium buyers comprising long-term investors and end-users are purchasing projects in CBD locations as land scarcity is limiting the number of new launches, particularly those that are close to amenities, key landmarks and the mass transit lines.
In line with the pick-up in sales activity in the first-hand segment, there was also healthy demand for resale CBD condominium units.
The lack of reasonably priced first-hand units is driving more buyers to seek resale units where prices can be 5-10 percent more affordable.
The average capital value for resale condominiums edged up from THB87,900 per sqm in Q2 to THB89,000 per sqm in Q3.
The Riverside area is an emerging residential location with the recent launch of some prominent projects. This included the Magnolias Waterfront Residences @ IconSiam riverside project, which was launched in September and sold a large proportion of the units within days of the launch, even with prices averaging THB280,000 per sqm.
The Riverside area is traditionally a popular area with owner-occupiers as the area is away from the congested city centre. However, with an increasing number of attractive projects coming onboard, complemented by the improvement in transportation infrastructure and amenities, this area will also become more appealing to investors.
Amid an improved market condition, condominium purchasing activity, particularly for downtown properties, is expected to continue to escalate. Buyers concerned about the lack of suitable products due to the scarcity of land as well as prices increasing further in the near future, are expected to enter the market.
Notwithstanding, there are still risks such as the persistent increases in household debt levels which will continue to affect homebuyer sentiment as well as more stringent loan application approvals.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
