Q3 2011 | Condominium
thailand
Bangkok Condominium Market REPORT Bangkok Condominium Market HIGHLIGHTS Launches dramatically down for Q3 2011 due to uncertainty regarding government incentive schemes for first home purchases. Incentives targeting mid to high-income earners will likely boost properties in the 2-5 million baht range as tax advantages will feature more prominently for this buyer segment. Uncertainties surrounding future government policies regarding residential property stymie the market. market indicators Q2 2011 - Q3 2011
Supply also fell in Q3 2011 compared to the previous quarter although is expected to pick up in Q4 2011.
new Supply LAUNCHES PRICES
Newly launched condominium units during the year 2010 – Q3 2011 by quarter
TAKE-UP
Source: Colliers International Thailand Research
New launches for Q3 2011 were dramatically down compared with the previous quarter by around 74%. Approximately 3,000 units were launched in Q3 compared to around 11,600 in Q2 2011 and was the lowest number recorded in the past three years. Uncertainty regarding government incentives policy has had a direct
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impact on buyer’s confidence and also developers have put back launching new projects to a time when sentiment will be more favourable based on greater clarity regarding government plans.
Bangkok condominium Market REPORT | Q3 2011 Newly launched condominium units in Q3 2011 by location
Source : Colliers International Thailand Research
In Q3 2011, more than 88% of total units launched are located in urban Bangkok area. Within urban Bangkok, the Northern Fringe has shown the highest numbers with approximately 1,600 units or 52% from the total.
The Outer City East area was second, with more than 600 units. Measures supporting mid to high-income earners has meant a strong performance in urban Bangkok in comparison to the suburbs.
Additional Supply by Quarter
Source: Department of Land, Colliers International Thailand Research Remark: The number of units does not include projects from the National Housing Authority
Approximately 4,000 new condominium units were completed and registered at the Department of Land in Q3 2011 and the total number for the whole of Bangkok was approximately 315,100 units, with more than 25,700 units scheduled to be completed in the last quarter of 2011. The
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number of condominium units under construction and scheduled to be completed in 2011 is the highest since the global financial crisis in 1997.
Bangkok condominium Market REPORT | Q3 2011 Total Historical Supply by Location to Q3 2011
Source: Department of Land, Colliers International Thailand Research
More than 204,200 condominium units, around 65% of the total, are located in the Suburban Bangkok area. Within the urban Bangkok area, the Northern Fringe contains the most units due to its proximity to the city centre, mass transit connections and relatively lower land prices
compared to the City area. The Outer City areas are appearing on the radar screen due to the extension of the BTS across the Chao Phra Ya river and further along Sukhumvit road and this is set to continue.
Future Supply – Urban Bangkok Cumulative future supply scheduled to be completed during Q4 2011 – 2013 by location in urban Bangkok (as of Q3 2011)
Source: Colliers International Thailand Research Remark: Supply does not included units in Suburban Bangkok
Approximately 25,700 units are scheduled to be completed during the rest of 2011. The Northern Fringe area continues to be the main player in urban Bangkok, with nearly 6,700 units scheduled to be completed
within 2011, followed by the City area with around 5,190 units. It is expected that the Northern Fringe will continue to dominate supply for the early part of the decade in urban Bangkok.
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Bangkok condominium Market REPORT | Q3 2011 Take-up Average sales proportion of newly launched units in Q3 2011 The average take up rate in Bangkok for newly launched units in Q3 2011 is approximately 40%. However due to the limited amount of launches in Q3 2011 and the uncertainty around government incentives, the figure
bears little indication to overall long term market sentiment. Buyers are simply waiting for clarity regarding proposed incentive programmes.
Launch with high take up rates in Q3 2011
Worth Supplies Co., Ltd. launched their first project on Sukhumvit soi 23. Rende Sukhumvit 23 contains a total of 50 units in the City area and sold out in two days. The project comprises of 1 – 2 bedroom units with unit
sizes starting from 35 square metres to around 79.5 square metres and the location is not far from BTS Asoke station and MRT Sukhumvit station.
Average Selling Prices of Newly Launched Projects by Location, Q3 2011 The average selling price of newly launched units in Q3 2011 in the City area is the highest at more than THB 130,000 per sq m from a total of four projects, followed by Southern Fringe area at approximately THB 93,000 per sq m from only one small project. Only one project was launched in the Outer City – East and Suburban area and the average selling price was approximately THB 55,200 per sq m and THB 48,900 per sq m respectively.
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Bangkok condominium Market REPORT | Q3 2011 Mass Transit Effect Average Selling Prices of Newly Launched Projects by Proximity to Existing Mass Transit Lines, during Q1 - Q3 2011
Source : Colliers International Thailand Research
For the first three quarters of 2011, the average selling price of newly launched projects not more than 200 metres from BTS / MRT lines was
approximately THB 105,000 per sq m which was higher than other areas by 13% - 65%.
The average take-up rate of newly launched projects by proximity to existing mass transit lines, during Q1 - Q3 2011
Source : Colliers International Thailand Research
The take-up rate of projects more than 1,000 metres from the BTS / MRT systems was the highest, at around 43%. Projects located 500 – 1,000 metres from the mass transit system had the lowest take-up rate,
because the selling price was similar to projects 200 – 500 metres from mass transit system. The difference of a couple of hundred metres can have a huge impact on the desirability of a condominium project.
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Bangkok condominium Market REPORT | Q3 2011 Financing Housing Loans for Personal Consumption Extended by Financial Institutions
Source: Bank of Thailand and Colliers International Thailand Research Note: Excludes negligible amounts of financing from other sources. Percentage change is comparable quarter-on-quarter.
The growth rate of housing loans increased approximately 2.3% in Q2 2011 compared with the first quarter of 2011. This was because of the previous government’s policy for first-home buyers with 0% interest
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rate in the first two years for unit prices of less than 3 million baht, which took effect in May 2011 and lasted for around two months.
Bangkok condominium Market REPORT | Q3 2011 Forecast The strong momentum regarding condominium launches has been corrected in the past three quarters based on initial policies to cool the market and ironically recent measures, which are supposed to stimulate the market, creating uncertainty amongst buyers and therefore leading to muted activity from developers. It is likely that current incentives will continue to apply to existing and future supply that can be completed by the end of 2012 in order for first
time buyers to be eligible for tax deductions. Therefore, developers will focus attention on take up of existing or forthcoming stock, which will probably result in continued dampened activity for new launches. The condominium market may face further headwinds if further alterations are made to government policy and global financial concerns deepen into a second recession.
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Bangkok condominium Market REPORT | Q3 2011
APPENDIX
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Bangkok condominium Market REPORT | Q3 2011 ZONING HISTORICAL SUPPLY BY YEAR
cumulative supply in Bangkok
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Bangkok condominium Market REPORT | Q3 2011 • CITY AREA The area covers four adjacent but competing sub-markets: the Sukhumvit section comprising Sukhumvit Road between Soi 1 and Soi 55 to the north and Soi 2 and Soi 38 to the south; the Central Lumpini section including Phloen Chit Road, Rama I Road, Soi Langsuan, Soi Sarasin, Chitlom Road, Ratchadamri Road, Witthayu Road and Rachaprasong Road; the Silom / Sathorn section; and the Riverside section fronting the Chao Phraya River along Charoenkrung Road and Charoennakorn Road, where several five-star hotels are located. The City area is convenient for businesspersons, expatriates and tourists, because of its proximity to many office buildings, retailing and local attractions.
• CITY FRINGE AREA This area covers three parts of Bangkok: Northern Fringe: This section covers the BTS route starting from Ratchathewi Station to Mo Chit Station to the north and the MRT route starting from Petchaburi station to Bangsue station to the north. Southern Fringe: This section covers Narathiwad Ratchanakarin Road, Chan Road, Sathupradit Road, Charoenkrung Road and Rama III Road along the Chao Phraya River. Eastern Fringe: This section covers the BTS route starting from Thong Lor Station to On Nut Station to the east, Rama IV Road and Petchaburi Road.
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This area covers locations with their own local infrastructure and convenient transportation. However, commuting is required to have access to the central business and entertainment areas.
• OUTER CITY AREA The area covers two parts of Bangkok: Outer City (East): This section starts from the extension of the BTS route at On Nut Station to the Bangkok boundary to the east. Outer City (West): This section starts from the extension of the BTS route at Taksin Station to Bang Wa station, which includes the area from Krung Thonburi Road to Ratchaphruek Road near Petchakasem intersection.
• SUBURBAN BANGKOK These are the environs outside the areas already mentioned. Expansion of the mass transit system is the main determinant for increasing future supply in a particular area. The expansion from On Nut to Samut Prakarn is scheduled to be completed in 2011. The expansion of the BTS will benefit directly the surrounding condominiums, as it will considerably reduce transportation costs and time. This will encourage the development of new condominiums in this area. Suburban Bangkok represents the biggest area and for the purposes of this report and includes Bangkok city’s old town (Koh Rattanakosin area and boundary area). This location has comprehensive town planning controls restricting building height, so there are no condominium projects in the area.
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researcher:
researcher:
Thailand Tony Picon Associate Director | Research email antony.picon@colliers.com
Thailand Surachet Kongcheep Senior Manager | Research email surachet.kongcheep@colliers.com
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