Residential condominium prices in prime downtown locations of Bangkok have been reaching new highs almost every six months for the past two years. The increases have driven the cost of ownership beyond the reach of many buyers, which has led to a renewed interest in well-located and well-maintained older buildings in comparably prime locations.
The declining performance in the low- to medium-priced market segments has prompted many developers to switch their focus to offering high-end and luxury residences located in prime Bangkok downtown areas. The competition to carve out a piece of the luxury market has led to a frenzy of land purchases, rapidly driving up the cost of land and development costs. Consequently, many developers are offering smaller units to keep purchase prices low enough to attract buyers.
Today, new one-bedroom units average 35-45sq m, compared with 50-60 sq m in older buildings, and new units have costs per square metre from 250,000 to 300,000 baht for luxury projects in central locations such as Sukhumvit, Thong Lor, Central Lumpini and Silom-Sathon. Leasehold properties are generally 20-30% cheaper than equivalent freehold properties and only exist in super-prime locations such as Lang Suan, Lumpini or the riverside.
Increases in new property prices have been a blessing for owners of older properties, especially those that are well-located and well-maintained. The result has been an uptick in prices in the resale property market as well. For example, a 103sq m, one-bedroom unit in the Lake Avenue development on Sukhumvit Soi 16 not far from Asok is currently selling for around 96,000 baht per sq m. This project was launched at 50,000 baht per sq m in 1994.
PRIME PLOT: Celes Asok, a new development near the Asok intersection, is offering units for 250,000-260,000 baht per sq m. Photo: Supplied
Wind Sukhumvit 23 is another, newer example, also not far from the Asok intersection. It was launched in 2009 at 80,000 baht per sq m and is currently asking 137,100 per sq m for a 54sq m unit with one bedroom. In comparison, a one-bedroom unit in the recently launched Celes Asok, near the Asok intersection, is selling for 250,000 to 260,000 baht per sq m with a one-bedroom unit sized at 34sq m.
While the prices of both the older projects listed above have risen around 3.8% and 7.9% per year, respectively, they are still around one-third to half the price of their new counterparts. As a result, many buyers, especially local buyers looking for a downtown home or a secondary residence, may consider older projects an alternative to costly new ones. They can still obtain a nicely laid-out unit with decent material specifications and more space for substantial savings over a new property on a baht-for-baht value comparison.
CBRE Research has found that 60% of new condominium units under construction in the fourth quarter of 2017 in downtown Bangkok were one-bedroom units, which means that options for larger units are scarcer and notably pricier. This trend will also support interest in well-maintained, excellently located and designed older projects, which generally feature larger units with a price savings.
However, not all older projects have attracted interest or benefitted in terms of steadily increasing property values. The four main factors that have the biggest impact on the attractiveness of older projects are location, maintenance, price, and layout/design.
Older downtown projects that can compete with newer projects need to be in excellent areas. This doesn't necessarily mean being located on a main road like Sukhumvit or even within short walking distance of a BTS or MRT station (although that is always beneficial). But it does mean that the project is in an attractive neighbourhood with plentiful amenities such as grocery stores, food and drink options, and conveniences such as salons, spas, laundromats and other amenities.
Such locations will make living in the area especially convenient and attractive to renters or buyers, especially foreigners, as they can keep their lifestyle conveniently centralised around their home. Therefore, areas such as the lower-numbered sois on Sukhumvit between Chidlom and Thong Lor/Ekamai, or main hubs such as Chong Nonsi and Silom-Sathon, as well as Central Lumpini are popular.
On the other hand, many older buildings, even if located in good areas with attractive prices, do not appreciate in value and can prove hard to resell if the units are poorly laid out or the building has not received appropriate maintenance. Older units may be larger, but due to poor layout, liveability is not good with a lot of the space being unusable.
Older buildings often have very low ceilings of around two to 2.5 metres and small windows compared with today's standard of 2.7-metre ceiling heights or greater and larger floor-to-ceiling windows. Good buys can be found in older condominiums built between 2005 and 2010 and featuring more modern and efficient designs. In these slightly newer projects the prices are still under 200,000 baht per sq m.
Owners of condominium units in projects that meet the requirements for good location, good maintenance and reasonably well designed (and more spacious) layouts will have a better chance of standing out from other resale units on the market. Given that prices of new, and smaller, units are becoming unmanageable for many buyers, units in older projects thus have an opportunity to thrive in the crowded resale market, especially among buyers looking for a downtown residence for their own use.