A home of your own on sukhumvit road

A home of your own on sukhumvit road

From expensive luxury condos in some of Bangkok's most affluent areas, to budget apartments for first-time buyers, there's plenty of variety on this central strip

The condominium market along Bangkok's Sukhumvit Road remains healthy, with a good balance of supply and demand. Within the lengthy strip are two distinct sub-markets and smaller divisions within these, each of which has its own unique characteristics.

Using data from 2009 to the first quarter of 2013, Knight Frank Thailand has been able to analyse the markets for condos in both lower (sois 1-55) and higher Sukhumvit (sois 57-107).

In lower Sukhumvit, the total supply of condos is 6,467 units, of which 77% have been sold, which is a satisfactory take-up rate.

For grade A to premium category properties, this is the place to look. The area has 3,820 units with more than 3,000 already sold, representing a take-up rate of almost 80%.

With development land in lower Sukhumvit in short supply and huge demand, the price of luxury condos in this area can only rise.

Due to the scarcity of premium land in the heart of Bangkok, most small-scale developers are being priced out of the market, leaving only the big names to battle it out.

But that doesn't mean the major players have it all their own way. Despite the option to sign a lucrative deal with a condo developer, some landowners are considering their alternatives, such as leasing the land to builders of hotels, offices and serviced apartments, all of which offer good long-term returns.

As a result, demand for luxury condos in lower Sukhumvit can only strengthen.

SOUND INVESTMENT

In the first quarter of this year, just 687 units were released to the market in that area, of which almost 80% have already been snapped up. The majority of buyers are affluent locals seeking either a high-end home or a good long-term investment.

For many investors, condos are seen as a hedge against inflation, promising good rental returns and capital growth at a time of relatively low interest rates.

The ongoing development of the Asok, Nana, Phrom Phong and Thong Lor areas as centres for shopping, dining and entertainment is also enhancing the desirability of lower Sukhumvit.

There has also been a slight upturn in foreign investment in the condo market in this area, which is likely driven by the good long-term prospects for the Thai economy after the creation of an Asean Economic Community in 2015.

Condo prices along Sukhumvit Road vary enormously, depending on each development's location, proximity to the BTS and build quality. In addition to those considerations, it's worth noting that per-square-metre prices tend to be higher in high-rise properties than low-rise buildings.

For a condo close to a BTS station, prices range from about 86,000 baht to 327,000 baht per square metre. The latter being what buyers are expected to pay at the record-breaking Gallerie Rue de 39, developed by Asian Property and located, appropriately, on Sukhumvit Soi 39.

Given the scarcity of development land in lower Sukhumvit, many property companies are looking east where good sites remain affordable. Between 2009 and the first quarter of 2013, 15,604 units entered the market, of which more than 11,000 have since been sold, representing a take-up rate of 71%.

In the first quarter of 2013, 2,933 condos were released, of which 46% have been sold.

There is still a concern that some of the demand in this area is from speculators looking to resell units and make a quick profit. Developers report that as many as 30-40% of the buyers in the pre-sale period are short-term investors, though during the transfer period, the sales records tend to suggest the buyers are "real" people who actually want to live in the area.

Most of the sold-out projects, such as Rhythm SKV44/1 by Asian Property and Ashton Morph by Ananda, are located close to the BTS and represent decent value for money considering their design quality and reputable developers.

It is important to note that the majority of new apartments in the higher Sukhumvit area are aimed at a different buyer group than those in lower Sukhumvit. All of the latest launches have been economy-class products situated on secondary roads close to the BTS extension. These are designed to appeal to people with limited budgets but who still want to be within reach of the mass transit network.

For those with slightly bigger budgets, value for money can be found at a number of more upmarket projects closer to the city centre. These include the Weltz Residence near the Phra Khanong BTS station, Ashton Morph at Thong Lor and Mode Sukhumvit 61 in Ekamai.

The average price per metre of apartments in higher Sukhumvit, but still close to the BTS (Thong Lor to On Nut), is 100,000 baht-plus, with grade A condos ranging from 118,000 to 150,000 baht per square metre. For lower-grade properties, usually in sub sois but still close to the BTS, prices range from 87,000 to 120,000 baht.

The future remains bright for the Sukhumvit condominium market, particularly in the prime zone. Due to the shortage of available land, this market will attract all types of buyers, from investors to home owners, both Thai and foreign.

More and more properties priced above 150,000 baht per square metre are also expected in the near future.

In higher Sukhumvit, increased urbanisation spurred by the BTS extension will lead to the continued development of entry-level and economy condos.


Risinee Sarikaputra is director of research and consultancy at Knight Frank Thailand. For more information, contact risinee.sarikaputra@th.knightfrank.com
tra@th.knightfrank.com

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