Proliferation in the periphery
Areas that have only recently benefited from new transit routes or that soon will made up the strongest demand for condominium units in the latter half of 2012, as land in more centrally located parts of the city becomes scarcer
Momentum continued in the Bangkok condominium market in the second half of 2012, bringing the total of new launches for the full year to 61,462 units, an increase of 49.2% from 41,167 the year before. The focus of many developers continued to be on locations near mass transit, with a noticeable pickup in activity along routes still under construction, particularly the MRT purple line in the Bangkok peripheral area.
Looking at cumulative supply from 2009-12, Knight Frank has revised its figures to reflect the fact that most projects launched before 2008 have been sold out. The cumulative supply was 236,769 units at the end of 2012.
In the second half of 2012, developers launched a total of 34,378 condominium units, an increase of 26.9% over the new launches in the first half of the year. The majority of the newly launched condominiums were in the Bangkok peripheral area, representing 74% of the total, followed by the city area with 16% and the city fringe with 10%.
For the purposes of our surveys, we divide the capital region into three areas _ city, city fringe and Bangkok peripheral area.
The city includes the central and surrounding areas that have traditionally been popular with affluent Thais and expats. The main focus is Sukhumvit from sois 2-42 on the south side and 1-63 on the north, and Rama III and the area along the Chao Phraya River.
The city fringe includes areas a little farther out but with easy access to the city centre via the BTS and MRT. These include Ratchada-Lat Phrao and Phahon Yothin from sois 1-14.
The Bangkok peripheral area describes areas that have only recently benefited from new transit routes or that soon will. They include "late Sukhumvit", from Soi 63 eastwards to the Bang Na intersection; Thon Buri, focusing on neighbourhoods around the new BTS stations built or planned west of the Chao Phraya; and other up-and-coming areas such as Chaeng Watthana, Kaset-Navamin, Srinakarin and Phetkasem.
In the second half of last year, 25,392 new condominium units were offered in the Bangkok peripheral area, reflecting good availability of land plots for development as well as the extension of the mass transit networks.
Within the peripheral area, a number of large condominiums were launched in the second half of 2012, including Manor Sanambinnam with 1,848 units, Fuse Mobius Ramkhamhaeng-Klongton with 1,390 units, and Lumpini Ville Ramkhamhaeng 60/2 with 1,212 units. The city area was home to 5,611 newly launched units. Inner Sukhumvit, particularly along the BTS line from Nana to Ekamai stations, featured 2,445 units, or nearly 44% of all new launches in the city area.
Only 3,375 units were launched in the city fringe area, where Ratchada-Lat Phrao locations were the most popular with 2,394 units.
Knight Frank Thailand research showed demand for Bangkok condominium units during the second half of 2012 was 23,790 units, up substantially by 41.5% from 16,810 in the first half.
The majority of demand during the second half was for the Bangkok peripheral area, with 18,306 units sold, representing a sales rate of 72% of total supply. Demand in this area was concentrated in the north, mainly Chaeng Watthana, Tiwanon and Rattanathibet areas, with 7,360 units sold out of 9,588 launched.
In the city area, sales totalled 3,937 units, or 70% of the 5,611 units launched. The rate in the city fringe was lower, with 1,546 or 46% of the 3,375 units launched. This reflected the fact that unit prices are now almost as high as in the city proper. Given a choice, many buyers would prefer to buy in the city centre, where condo prices are expected to appreciate more rapidly because of the scarcity of land, especially in the inner Sukhumvit area.
The overall take-up rate for Bangkok condominiums during the second half of 2012 was 69.2%, a significant increase from 62.1% in the first half.
The average selling price during the second half of 2012 was 102,230 baht per square metre, up 4% from the first half and 7.6% from the same period in 2011. The average selling price in the city was the highest at 150,648 baht sq m, an increase of 3.8% from the first half of 2012 and 7.9% from the second half of 2011. The average selling price in the city fringe was 102,088 baht sq m, up 4% from the first half of 2012 and 8.15% from the second half of 2011. In the Bangkok peripheral area the average was 53,916 baht sq m, up 4.9% from the first half of 2012.
Selling prices of condominiums are expected to continue rising due to increases in labour and fuel costs, which push up overall construction expenses. Land prices also keep increasing, especially in the city area, where future price increases could be significant.
Despite the recent popularity of the peripheral area, we expect a slowdown in new launches until the existing surplus can be absorbed. This could result in more launches in the city and city fringe areas in 2013. However, the higher cost of development in the city area will be a major factor in developing new condominium projects.
Given the cost factors and developers' desire to keep prices attractive, the trend will be toward even more compact units, with one-bedroom units smaller than 35 sq m. The majority of new launches will be one-bedroom units as well. Studios will disappear from the market since architects today can design good one-bedroom units in spaces that used to be considered too small for anything but a studio. Because units will be smaller, unit selling prices may stabilise even if prices per square metre keep increasing.
Another interesting trend to watch for in 2013 will be the launch of premium condominiums in the city area at prices exceeding 150,000 baht sq m.
Risinee Sarikaputra is associate director of research and valuation with Knight Frank Thailand, contact firstname.lastname@example.org.
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Writer: Risinee Sarikaputra