Bangkok Condominium Market Report Q1/2013

Q1 2013 | CONDOMINIUM

THAILAND

BANGKOK CONDOMINIUM MARKET REPORT

Bangkok Condominium Market EXECUTIVE SUMMARY T Bangkok’s condominium market continued to boom in the first three months of 2013, with the most new project launches the city has seen in years.

Despite warnings from some government agencies that there is a risk of oversupply, developers continue to have confidence in the market and are expected to launch new projects throughout the rest of the year.

Nearly 16,070 new units were launched in Q1 2013, up by around 2,840 units from Q4 2012, and the highest quarterly increase for the last nine quarters.

MARKET INDICATORS Q4 2012 - Q1 2013 NEW SUPPLY LAUNCHES PRICES TAKE-UP

Take-up rate for newly launched units in the first quarter of 2013 was approximately 62%, with projects in the eastern, southern and western fringes around the city centre attracting the most interest.

Prices rose by around 6% compared to the last quarter of 2012, with a unit in a newly-launched project fetching an average of THB 67,650 per sq m. Prices are higher in the city centre than in the suburbs, and the limited availability of land along main transport routes has led to more projects being developed on smaller streets away from the main thoroughfares, where existing houses and shop houses can constrain development and drive up the price of land.

Large-scale developers with strong reputations dominate the condominium market, and are increasingly focused on the middle to low income market that lies outside urban Bangkok. Most of the demand in the city is for affordable condominium units with a selling price of less than THB3 million, and developers will continue to target this group throughout 2013.

NEWLY LAUNCHED CONDOMINIUM UNITS BETWEEN 2011 ANDQ1 2013 BY QUARTER

Source: Colliers International Thailand Research

The number of new launches in Q1 2013 rose significantly compared to the previous quarter, by approximately 2,840 units. More than 16,070 units were launched in the first quarter of 2013,up from around 13,230 units in Q4

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2012, evidence that the condominium market in Bangkok continues to boom. Although some government organisations were concerned about an oversupply of condominiums, developers still have confidence in the market.

BANGKOK CONDOMINIUM MARKET REPORT | Q1 2013 NEWLY LAUNCHED CONDOMINIUM UNITS IN Q1 2013 BY LOCATION

Source : Colliers International Thailand Research

Most new projects launched in the first quarter (nearly 11,100 units) were located in suburban Bangkok, while nearly 5,000 units were located in the urban areas of Bangkok. In the urban Bangkok area, the Northern Fringe saw the highest number of new launches, with

approximately 1,600 units. This was backed up by a two large–scale projects; Noble Revolve Ratchada and Quinn Condo Ratchada. The Outer City – East Area came second, with approximately 1,130 units.

SUPPLY 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

Reports suggest that approximately 6,160 new condominium units completed and registered by the Department of Land in Q1 2013. The total number of units in the entire Bangkok region was approximately

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361,170 units. A shortage of construction workers remains the main obstacle to construction progress for developers; completion dates have been postponed for many projects this year to date.

BANGKOK CONDOMINIUM MARKET REPORT | Q1 2013 TOTAL HISTORICAL SUPPLY BY LOCATION AS OF Q1 2013

Source: Department of Land, Colliers International Thailand Research

More than 223,280 condominium units (around 62% of the total) are located in the suburban Bangkok area. Within the urban Bangkok area, the Northern Fringe contains the most condominiums, with more than 48,100 units, followed by the City Area. Areas along the existing mass

transit system are the most fashionable for the Bangkok condominium market, and areas along the new line extensions have also become popular during the last two years.

FUTURE SUPPLY – URBAN BANGKOK CUMULATIVE URBAN BANGKOK’S FUTURE SUPPLY SCHEDULED FOR COMPLETION BETWEEN 2013 AND 2015 BY LOCATION AS OF Q1 2013

Source: Colliers International Thailand Research Remark: Supply does not include units in suburban Bangkok

Approximately 37,440 units are scheduled to be completed in 2013 in urban Bangkok, and more than 36,830 units are due for completion in suburban areas. The Northern Fringe continues to be a key area in urban Bangkok, with more than 12,860 units scheduled to be completed in 2013, followed by the Southern Fringe with around 6,400 units. This is

because these two locations are in close proximity to the city centre with good mass transit connections, and enjoy relatively low land prices compared to the City Area.

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BANGKOK CONDOMINIUM MARKET REPORT | Q1 2013 TAKE-UP AAVERAGE SALES PROPORTION OF NEWLY LAUNCHED UNITS IN Q1 2013 BY LOCATION

Source: Colliers International Thailand Research

The take-up rate in the Eastern Fringe is the highest in Bangkok, followed by the Southern Fringe and Outer City – West areas. The high take-up rate in the southern fringe area included only one project launch; with

most condominium projects launched in March, some had only recorded a low take-up rate by the end of the first quarter.

LAUNCHES WITH HIGH TAKE-UP RATES IN Q1 2013

Buyers still have confidence in Sansiri Plc. Although they launched many projects in the first quarter, they all received a high take-up rate, including two d Condo projects. The first (dcondo Campus Resort Ratchaphruek – Charan 13 on Charansanitwong 13 Road) sold out with almost 100% of the total 527 units sold within one month.

The other dcondo by Sansiri (d Bura Pran Nok) is closer to Siriraj Hospital, and not far from the sky train extension line (i.e. the blue line).

All of its 416 units sold out within just one month of the official launch.

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BANGKOK CONDOMINIUM MARKET REPORT | Q1 2013

Lumpini Place Suksawat – Rama 2 (located on Suksawat Road and developed by LPN Development Plc.) has shown a high level of performance in the first quarter of 2013, selling 727 units in approximately one week, many of which are onebedroom units at around 26-52 sq m.

Noble Development Plc., launched its first condominium project in 2013. Noble Revolve Ratchada has a total of 762 units close to Thailand Cultural Centre MRT Station. More than 85% of the total units were sold out within one month, and this trend is continuing.

AVERAGE SELLING PRICE FOR NEWLY LAUNCHED PROJECTS BY LOCATION IN Q1 2013

Source: Colliers International Thailand Research

The average price in the City Area in Q1 was more than THB162,500 per sq m, because while most new projects launched with starting prices of around THB150,000 per sq m, the starting price for Galerie rue de 39 (developed by Asian Property Development Plc.) was approximately THB250,000 per sq m. The average selling price for all new projects

launched in the first quarter was around THB67,650 per sq m. This represents an increase from the previous quarter of around 6%.

Suburban Bangkok still yields the lowest prices at around THB54,100 per sq m.

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BANGKOK CONDOMINIUM MARKET REPORT | Q1 2013 NEW CONDOMINIUM UNITS LAUNCHED BETWEEN 2012 ANDQ1 2013 BY AVERAGE SELLING PRICE

Source: Colliers International Thailand Research.

Most of the condominium launches in 2012 and the first quarter of 2013 yielded a selling price in the range of THB40,001 – THB60,000 per sq m, with most projects targeting the mid to low income bracket. The average price for most of the condominium units launched between the previous year and Q1 2013 was less than THB3 million for a onebedroom unit with an area of approximately 35 sq m.

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Nearly 49% of the total units launched in the first quarter were in the range of THB40,001 – THB60,000 per sq m, with prices reaching their highest levels for the past five quarters.

BANGKOK CONDOMINIUM MARKET REPORT | Q1 2013 MASS TRANSIT EFFECT AVERAGE SELLING PRICE FOR NEWLY LAUNCHED PROJECTS BY PROXIMITY TO EXISTING MASS TRANSIT LINES IN Q1 2013

Source: Colliers International Thailand Research

The average selling price is highest for projects that are less than 200 metres from mass transit stations (i.e. BTS or MRT), at nearly THB120,000 per sq m. Although some projects in these areas can start at more than THB250,000 per sq m, some that boast a high number of

units can start at around THB88,000 per sq m, bringing down the average price in this area. The average price for locations that are more than one kilometre from a mass transit station is the lowest, at nearly THB54,700 per sq m.

TAKE-UP RATE FOR NEWLY LAUNCHED PROJECTS BY PROXIMITY TO EXISTING MASS TRANSIT LINES IN Q1 2013

Source: Colliers International Thailand Research

The take-up rate for projects less than 200 metres from the BTS and MRT systems was the highest at around 70%, although the average price was highest. The area furthest from BTS and MRT stations (more

than 1,000 meters) had the second highest take-up rate with approximately 62%, due to the lower selling price and their suitability for most buyers in Bangkok.

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BANGKOK CONDOMINIUM MARKET REPORT | Q1 2013 FINANCING HOUSING LOANS FOR PERSONAL CONSUMPTION EXTENDED BY FINANCIAL INSTITUTIONS

Source: Bank of Thailand and Colliers International Thailand Research Remark: Excludes negligible amounts of financing from other sources; percentage change is comparable QoQ

The growth rate for housing loans in the last quarter of 2012 increased by approximately 2% compared to the third quarter. Many government organisations and property experts were concerned about an oversupply in the condominium market during 2013 and 2014, but most developers still have confidence in the market. This is explained by the fact that

commercial banks in Thailand are mostly focussed on private and project mortgage loans. Hence the percentage-change is lowest in the last quarter of 2012.

FORECAST Nearly 16,070 units were launched in the first quarter of 2013. This is the highest number of new launches for several years, and despite some government organisations being concerned about oversupply, developers remained confident about purchasing-power and continued to launch projects, a trend which is set to persist for the remainder of the year.

The areas along the new mass transit extension lines were popular for developers in 2012. However, the main obstacle for projects in these areas was the limited availability of land. This is due to the fact that some locations in the older residential areaswere constrained by shop-houses and houses along the both sides of the road. Consequently land price for these areas were inflated, bringing them in line with those along the existing mass transit lines. As a result, some developers sought out available land on the smaller roads (or sois) along the transit lines, due to cheaper land prices.

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Large-scale developers with listings and strong reputations dominate the condominium market and they are focusing more on the middle- to low-income market that lies outside the Urban Bangkok Area. Most of the demand in Bangkok is for affordable condominium units with a selling price of less than THB3 million; developers continued targeting this group in 2013.

The average selling price for newly launched units in the first quarter of 2013 increased from the last quarter of 2012 by around 6%, due to a range of factors affecting construction costs. Average prices during the rest of this year may be slightly higher than the average in the first quarter.

BANGKOK CONDOMINIUM MARKET REPORT | Q1 2013

• 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.

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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BANGKOK CONDOMINIUM MARKET REPORT | Q4 2012 COLLIERS INTERNATIONAL THAILAND MANAGEMENT TEAM PROJECT SALES & MARKETING Monchai Orawongpaisan | Associate Director RESIDENTIAL SALES & LEASING Napaswan Chotephard | Manager RETAIL SERVICES Asharawan Wachananont | Associate Director RESEARCH Surachet Kongcheep | Senior Manager OFFICE SERVICES Nattawan Radomyos | Senior Manager INDUSTRIAL SERVICES Narumon Rodsiravoraphat | Associate Director ADVISORY SERVICES | HOSPITALITY Jean Marc Garret | Director ADVISORY SERVICES Napatr Tienchutima | Associate Director REAL ESTATE MANAGEMENT SERVICES Thanasit Tonsatcha | Associate Director INVESTMENT SERVICES Nukarn Suwatikul | Associate Director Wasan Rattanakijjanukul | Senior Manager

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