Heightened demand is likely to follow last year's slowdown which saw the addition of only around 10,000 new units in the capital
As many property developers have cautiously reduced project launches this year, the pace of new developments is likely to pick up in the new year because they now have few units to offer, said Apisit Limlomwongse, managing director of Nexus Property Consultants.
Nexus can attest to this trend because it is swamped with requests to find good land plots for development.
"We think the trend is for the supply to increase next year, but it will not expand in a directionless way," said Mr Apisit. "The growth will be carefully handled because people have learned their lesson and still worry about the economic situation."
Research by Nexus shows that the supply of new condominiums in the capital this year will total only around 10,000 units, lower than previous years and half the level seen earlier in the decade when business was booming.
Mr Apisit added that the foreign market seems to have disappeared both in Bangkok and the resorts this year. The two underlying reasons for this are the economic crisis and decreased tourism.
"I am not sure about the government's tourism promotion this year. As far as I have heard and personally found, the recent demand is quite strong but it is mostly domestic - Thais travelling in Thailand.
"I am uncertain what the Thai tourism figures are going to be like, but I think we need to focus on pulling foreign tourists back because relying on the domestic tourist market might not lead to as much economic growth as we want.
"Many people I talk to say that things seem okay, but no spending is occurring because Thais holidaying in Thailand are getting promotional discounts, while fewer foreigners are coming in."
Although more property projects are expected to be launched in the new year, Mr Apisit believes companies would avoid large developments and instead opt for mid-sized structures that can be built and transferred faster.
While the global economy has been in poor shape this year and is still struggling to get back on an even keel, interestingly land prices in key areas of Bangkok have been rising.
Nexus' search for land for developers has revealed that plots in the Sukhumvit area, near mass transit stations but only suitable for mid- to low-rise developments, are going for 300,000 to 350,000 baht a square wah (4 square metres), and those suitable for high-rises are 400,000 to 450,000 baht a sq w.
"It seems land costs have not dropped although construction costs are staying steady, which means developers have to work on the pricing if their units aren't going to carry hefty price tags."
Mr Apisit said pricing and location are the key factors to tap the real demand that is still very much there. This became abundantly clear after his company successfully revamped its strategy recently by collecting appropriately priced projects located close to mass transit for an exhibition at CentralWorld, rather than introducing a mixed bag of developments as it had done earlier in the year.
"It was the middle of last month. We arranged it for three days and there were lots of visitors each day - I was really surprised," he said.
The affordable condos these buyers seek are super compact - one-bedroom units of 30 sq m or less and two bedrooms about 45 sq m. The furniture is also compact in order to make the unit look more roomy. While developers of this type of condominium definitely cut costs when it comes to furniture, they generally try their best to find suitable materials to help maintain the overall look. These condos are usually priced at 60,000 to 70,000 baht sq m and investors who buy them are able to tap the Thai rental market for around 8,000 to 12,000 baht a month.
The other demand is for medium- to high-end units in hot locations such as Thong Lor and Soi Ari, and because the price of these units is more than 100,000 baht sq m, the quality has to be good. The unit sizes are less compact, with one bedroom around 40 sq m and two bedrooms 55 to 60 sq m.
Mr Apisit has also noticed that a new group of condo buyers has emerged - elderly people who are concerned with at looking location and facilities, as well as security. Sometimes families split up to live in the same building - grandparents in one unit and the younger generations in others.
"So they can conveniently meet with each other, yet it is not like living together in the same house."
Nexus' research also shows that the cumulative condominium supply in Bangkok now stands at 117,183 units and will reach 147,311 units by the end of 2010. Up to 4,225 new units were added to the market from 15 new projects in the first half of 2009, with Sukhumvit being the best-selling location.
The total number of units sold in the first half of 2009 was 6,380, a decrease of 14% from the second half of 2008 and the lowest level in the past three years. Data also shows that the average number of units sold in recent years is 9,600. Compared to this the 6,380 units sold in the first half of this year is a drop of 34%.
The three best-selling areas were On Nut with 25.6% of units sold, followed by Phahon Yothin with 22.6% and Sukhumvit with 15.1%. The average selling price was 84,000 baht sq m and the average unit size 67 sq m.
Mr Apisit said that after Sukhumvit the other hot areas include Soi Ari off Phahon Yothin road and Ratchadaphisek, although the market in the latter is definitely for smaller units.
Witthayu and Phloenchit roads continue to remain big favourites, with prices usually being very high and the take-up rate good. However, not many projects are launched in this zone because good land plots are hard to secure.
"Secondary zones include Sathorn. Actually this is a zone that can sell, but not so quickly - ask any developer, no one really wants to do a project in Sathorn because this area consists of office workers and most of them already have a house. This is not a residential zone."
Posts
No comments:
Post a Comment