Bangkok Condominium Market Report Q2 2010
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Transcript of Bangkok Condominium Market Report Q2 2010
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8/9/2019 Bangkok Condominium Market Report Q2 2010
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Th Kd Rprtco l l i e R s i n T e R n aT i o n a l | T H a i l a n D
eut summryNew launches in Q2 2010 ell dramatically compared to the previous two quarters as prolongeddemonstrations culminating in violent rioting led to developers delaying launch dates.
The reduction in tensions means that the market is set to resume its stellar growth or the secondhal o 2010.
2010 is likely to see the largest completion o new supply since 1997 with an estimated increase ojust over 30,230 units compared with approximately 27,430 units in 2009. Less than 3,200 unitswere supplied in Q2 2010.
Developers are shiting ocus towards urban Bangkok as more units will be supplied in the urban areacompared to suburban Bangkok.
Newly launched units in the second quarter o 2010 decreased rom the previous quarter byapproximately 67% due to the demonstrations and violence in April and May, which led to numer-ous developers postponing their projects. Nearly 4,600 units were launched in Q2 2010.
n dmum uh tumb du t urt
MaRKeT inDicaToRs
Q1 - Q2 2010
sUPPlY
laUncHes
PRices
TaKe-UP
www.colliers.co.th
B a n g Ko K c o n D o M i n i U M M a R K e T | 2 n D Q Ua R T e R | 2 0 1 0
Source : Coll iers International Thailand Research
newlY laUncHeD conDoMiniUM UniTs DURing THe YeaR
2009 - Q2 2010 BY QUaRTeR.
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Zoning
The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
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The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
CITY AREA
The area covers our adjacent but competing sub-markets: the Sukhumvit section comprising SukhumvitRoad between Soi 1 and Soi 55 to the north and Soi 2
and Soi 38 to the south; the Central Lumpini sectionincluding Phloen Chit Road, Rama I Road, SoiLangsuan, Soi Sarasin, Chitlom Road RatchadamriRoad, Witthayu Road and Rachaprasong Road; the
Silom / Sathorn section; and the Riverside section ronting theChaophraya River along Charoenkrung Road and Charoenna-korn Road, where several ve-star hotels are located. The City
Area is convenient or businessmen, expatriates and tourists, be-cause o its proximity to many oce buildings, retailing and localattractions. Parts o this area were directly aected by the Apriland May demonstrations and violence.
OUTER CITY AREA
The area covers two parts o Bangkok:
o Outer City (East): This section starts romthe extension o the BTS route at On NutStation to the Bangkok boundary to the east.o Outer City (West): This section starts romthe extension o the BTS route at Taksin
Station to Bang Wa station which includes the area rom KrungThonburi Road to Ratchaphruek Road near Petchakasem inter-section.
SUBURBAN BANGKOK
These are the environs outside the areas alreadymentioned. Expansion o the mass transit system is themain determinant or increasing uture supply in aparticular area. The expansion rom On - Nut to SamutPrakarn is scheduled to be completed in 2011. The
expansion o the BTS will benet directly thesurrounding condominiums, as it will considerablyreduce transportation costs and time. This willencourage the development o new condominiums in
this area. Suburban Bangkok represents the biggest area and orthe purposes o this report includes Bangkok city old town (KohRattanakosin area and boundary area). This location has com-prehensive town planning controls restricting building height,so there are no condominium projects in the area.
CITY FRINGE AREA
This area covers three parts o Bangkok:
o Northern Fringe: This section covers theBTS route starting rom Ratchathewi Stationto Mo Chit Station to the north and the MRT
route starting rom Petchaburi station toBangsue station to the north.
o Southern Fringe: This section coversNarathiwad Ratchanakarin Road, Chan Road,Sathupradit Road, Charoenkrung Road andRama III Road along the Chaophraya River.
o Eastern Fringe: This section covers the BTS route starting romThong Lor Station to On Nut Station to the east, Rama IV Roadand Petchaburi Road,
This area covers locations with their own local inrastructureand convenient transportation but require commuting to haveaccess to the central business and entertainment areas.
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The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
Suburban Bangkok area continued to show the highest numberswith approximately 2,900 units being launched in Q2 2010. Theslowdown in general activity by consumers during the protestswas the most important actor aecting the market as more de-velopers postponed projects in all locations. More than 44%o total projects were launched in June and some projects weredelayed to the second hal o 2010.
The largest project in this quarter, The Tree Kiak Kai Stationby Pruksa Real Estate Plc. was launched with over 1,000 unitsin the suburban Bangkok area. The listed companies continuedto lead the market with approximately 3,000 units or 68% o thetotal market.
Only approximately 3,200 new condominium units werecompleted and registered at the Department o Land in Q22010 despite the continuation o some o the incentives. Thisrepresented a all o about 54% rom the previous quarter.
However total condominium units scheduled to be completed inthe rest o 2010 is estimated to be nearly 22,500 units.
newlY laUncHeD conDoMiniUM UniTs in Q2 2010 BY locaTion
Source : Colliers International Thailand Research
Source : Department of Land, Colliers International Thailand ResearchRemark : The number of units does not include projects from the National Housing Authority
HisToRical sUPPlY
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The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
ToTal sUPPlY BY locaTion To Q2 2010
More than 68% o total condominium units are located in thesuburban Bangkok area or more than 186,000 units. Within the
urban area, the Northern Fringe contains the most units due toits proximity to the centre and mass transit connections.
Source : Depar tment of Land, Collier s International Thailand Research
Only 333 units were added in Q2 2010, so total supply in this
area was approximately 21,600 units and roughly 1,700 units are
scheduled to be completed in the second hal o this year.
ciTY aRea
Source : Colliers International Thailand Research
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Source : Colliers International Thailand ResearchRemark : Supply does not included unit in Suburban Bangkok
About 1,600 units were supplied in Q2 2010 but almost 7,000units are under construction and scheduled to be completed inthe second hal o the year, and this area still remains the maintarget or condominium projects in the near uture, especially
Phahonyothin, Ratchdapisek, Ari and Sutthisan Road. TheNorthern Fringe contains a signicant number o BTS and MRTstations, the main public transportation systems in Bangkok.
Source : Colliers International Thailand Research
noRTHeRn FRinge aRea
FUTURe sUPPlY
cUMUlaTive FUTURe sUPPlY scHeDUleD To Be coMPleTeD DURing THe YeaR 2010 2013BY locaTion in URBan BangKoK. (as oF Q2 2010)
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The Northern Fringe area continues to be the main player inurban Bangkok with approximately 7,000 scheduled to be com-pleted in the second hal o 2010 or an increase o around 187%rom the rst six months o 2010. The City area still remainsa ocal point or developers or high end category projects.
The sale o a prime land plot in Wireless Road or 1.5 millionbaht per square wah (375,000 per square metre) means that acondominium unit in this location could be priced up to 300,000baht per square metre.
Suburban Bangkok area still contains the largest share ocondominium supply catering predominantly or the mid tolow end segment. However, developers are shiting ocus oncondominiums within the urban Bangkok area as demonstrated
in the charts above. More people are attracted to the convenience
o urban living, especially in the orm o better transportation.The general reduction in unit size means that more residents areable to aord this urban liestyle. This trend will likely eect thedirection o oce and retail development in the process.
FUTURe sUPPlY THe URBaniZaTion oF BangKoK
THe PRoPoRTion oF exisTing conDoMiniUM sUPPlY in BangKoK BY locaTion, as oF H1 2010
THe PRoPoRTion oF FUTURe conDoMiniUM sUPPlY in BangKoK BY locaTion, BY 2013
Source : Colliers International Thailand Research
Source : Colliers International Thailand Research
The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
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The take up rate or condominium projects in Bangkok or Q2was approximately 77 %. The occupancy rate in the NorthernFringe area is the highest ollowed by the City area and subur-ban Bangkok area. Various actors account or this, the act thatmany o the Northern Fringe launches were close to mass transit
lines means that they are very popular with buyers. The primelocation o the City area accounts or the high take up there andthe aordability o suburban Bangkok to mostly rst time buyersis the main reason behind its popularity.
TaKe UP
sales PRoPoRTion oF newlY laUncHeD UniTs in Q2 2010 BY locaTion
Source : Colliers International Thailand Research
The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
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laUncHes wiTH HigH TaKe UP RaTes in Q2 2010
The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
In suburban Bangkok area LPN Development still continues tobe the main player in the market, Lumpini Condotown Ranin-
dra Nawamin building D sold its units out in a matter o hours.This building contained only studio units at just 22 sq m. with aselling price starting at 678,000 baht per unit.
The Tree Kiak Kai Station by Pruksa had its 1,047 units soldout in one day with just the top foor kept until construction is
completed. The Tree is close to the uture BTS line (Blue Line)and new parliament as well as being located near the Chao PhraYa river and with unit sizes being aordable.
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The Seed Atom by Pruksa was the only project launched in theNorthern Fringe area and it sold out all o its 557 units in 3 hours.This development is located in the newly ashionable Ari district
by a BTS station. Studio units o 22.41 sq m and one bedroomunits o 34.79 sq m were available, which was one o the criticalactors behind the successul take up.
In the City area KEYNE by Sansiri has shown the highest takeup rate almost 95% with 208 units with a selling price more than140,000 baht per sq m. Unit sizes start rom 33.5 sq m or onebedroom units and the project is located between Thong Lor andEkamai.
It is noticeable that small unit sizes were a common eature o thesuccessul launches.
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Source : Colliers International Thailand Research
Source : Colliers International Thailand Research
TaKe UP in PRoxiMiTY To exisTing Mass TRansiT lines
selling PRices oF newlY laUncHeD PRojecTs BY locaTion 2005 - Q2 2010
In the second quarter activity in Bangkok was nondescript dueto the political violence, so developers delayed launching theircondominium projects. For those projects that were launchedthe take up rate in Q2 was higher than Q1. The take up rate ocondominium projects less than 200 meters rom BTS / MRTlines was still highest at nearly 96%, ollowed by the projects arrom BTS / MRT 501 1,000 meters 84%. The projects located
201 500 meters rom mass transit lines showed the lowest rateo around 37%. While access to mass transit remains a strongmagnet or buyers, the specic location is still key and pricingmay be overestimating projects located more than a ew hundredmetres rom a station. The dierence rom being able to walk toa station or having to rely on transportation remains crucial.
Note: Q2 2010 only 1 2 projects were launched in each lo-
cation, the selling prices may not be realistic, so the rst andsecond quarters o 2010 have been included together or a morereliable assessment.
The average selling price decreased in every location, except inOuter City West and Southern Fringe area only. For the Outer
City West area only 2 projects, by Pruksa Real Estate Plc., were
launched in H1 2010 which extracted a higher selling price inthe area. The selling price o two projects in the Southern Fringearea was higher than other projects in the area. The average sell-ing price in the Eastern Fringe showed the biggest drop o nearly36%, because only lower grade projects were launched and thesewere urther rom the BTS line compared with previous years.
The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
iniTial laUncH PRices
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The average selling price in Q2 2010 decreased in our locations.In Q2 2010 the average selling price was higher than Q1 2010,
due to more projects being in the luxury bracket and havingbetter access to the BTS/MRT.
Source : Colliers International Thailand Research
aveRage selling PRice oF newlY laUncHeD PRojecTs in Q2 2010
The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
The proximity o a project to mass transit lines has a positive
eect on pricing. Being located within 200 metres rom a sta-tion means that transportation rom a condominium is usuallyunnecessary and this enhances the appeal to buyers. Howeverthe chart shows some anomalies with just one luxury project onSukhumvit 55 road (Thonglor) with only 8 units located overone kilometre rom the BTS but with a high selling price. In
general a premium can be attached to short distances rom mass
transit and this could lead to the development o smaller masstransit systems nanced by the developers supported by the priceeect. Grand Canal Land Plc is planning to build a monorailsystem to link its properties on Rama IX Road. Further analysis isrecommended or other parts o Bangkok.
TaKe UP
selling PRices oF newlY laUncHeD PRojecTs BY PRoxiMiTY
To Mass TRansiT lines, H1 2010
Source : Colliers International Thailand Research
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TRenDs - BUs RaPiD TRansiT (BRT)
TRenDs - FocUsing on THe MiD To low enD MaRKeT
TRenDs DeveloPeRs BRancHing oUT
MiD anD low enD BRanDs esTaBlisHeD BY DeveloPeRs
The BRT entered service at the end o Q2 2010 on a trialbasis with ree ares. The line begins at Sathorn Road and
terminates on Thonburi side at Ratchaphruek. It is dicult toanalyse the eect o the BRT on condominium developments atsuch an early stage but certain observations can be made. Theexperience is something o a hybrid between a mass transit andordinary bus. The urther the BRT goes the more it encounters roadtrac. The connection between Sathorn station and ChongNongsi is quite ar. Thereore the initial prediction is that it will beo benet to people working in oces located in the Sathornroad area and or those living by the rst ve or so stations.
Condominium projects or lower mid range will continue tobe popular and the big developers are also interested in enteringthis market, with selling prices o less than 2.5 million baht perunit.
Listed developers are also interested in the lower and mid rangemarkets as these contain the largest slice o condominium pie,
and some developers, such as Regent Green Power Co.,Ltdand Mankong Kehakarn Plc, have taken advantage o Board oInvestment (BOI) incentives or condominium developmentswith units being not less than 28 sq m and less than 1 MillionBaht.
The robust growth o the condominium sector in Bangkok canbe attributed not only to external actors such as new transportsystems and economic growth but the aptitude o the developersthemselves. The provision o quality products at aordable pricesis a cornerstone to the condominium story over the past decadeand now the trend should be or this success to be replicated
outside o the country. Tentative steps have been made with anumber o large developers making their rst ventures abroad.Pruksa PLC has been involved in residential projects in Ban-galore in India, Maldives and Haiphong in northern Vietnam.
Sansiri PCL has started to make investments in UK real estate.
Stark contracts can be made between the maturity o the Thai-land residential market and the inancy o that in Vietnam orexample, with its generally poor quality apartment blocks in themid end segment with limited acilities and dicult to market
unit congurations. In these sorts o market many opportunitiesare available or Thai developers to become uture champions inthe region.
Just as manuacturers o consumer products have ocused theirattention on branding or lower priced products in the past tenyears this has been replicated in the condominium market inThailand with large developers dierentiating their oerings in
a more discernable way. The branding o residential productsin Bangkok is more intense than perhaps anywhere else in theworld.
The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
no. BRanD DeveloPeR
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FoRecasT
As the unrest subsided in June condence in the market has returned and develop-ers are looking to launch new projects on the market or the next ew quarters. Theending o the government incentives and expected small rises in interest rates are
unlikely to have any signicant detrimental eect on the condominium market asmass transit and aordability remain powerul orces in Bangkok.
The land price in the urban area, especially along the mass transit lines aects con-dominium project development. Current Bangkok town planning expires in 2011and it is possible that the new urban planning regulations will allow some areas tohave a greater Floor Area Ratio (FAR). This means that it will be more attractiveor developers to purchase land or new projects. Along with new mass transit linesand extensions this will add a urther boost to the dynamic condominium market.
As the large developers grow in size it is likely that a number will seriously considerventuring urther aeld in emerging markets, such as Vietnam and India, that arein need o experienced residential players to add quality and depth to the market.This will also allow such developers to balance their burgeoning portolios.
The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market
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conTacT inFoRMaTion
THailanD:Patima JeerapaetManaging [email protected]
Antony PiconSenior Manager | [email protected]
Surachet KongcheepManager | [email protected]
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ManageMenT
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Colliers International Thailand
Bangkok Ofce : 17/F Ploenchit Center, 2 SukhumvitRd. , Klongtoey, Bangkok 10110Tel: 662 656 7000 Fax: 662 656 7111Email : [email protected]
Pattaya Ofce : 519/4-5, Pattaya Second Road(Opposite Central Festival Pattaya Beach),Nongprue, Banglamung, Chonburi 20150Tel: 6638 364 411-2 Fax: 6638 364 414Email : [email protected]
collieRs inTeRnaTional THailanDManageMenT TeaM
ASSET MANAGEMENTWasan Rattanakijjanukul | Manager
Nukarn Suwatikul | Manager
CONSULTANCYNapart Tienchutima | Manager
COMMERCIAL / INDUSTRIAL /RETAILNarumon Rodsiravoraphat | Senior Manager
FACILITY / PROPERTY MANAGEMENTViroj Piromthong | Management AdvisorBandid Chayintu |Associate Director
HOSPITALITY DIVISIONJean Marc Garret | Director
INVESTMENTNukarn Suwatikul | Senior Manager
RESIDENTIALPatima Jeerapaet | Managing Director
RESEARCH & ADVISORYAntony Picon | Senior ManagerSurachet Kongcheep | Manager
VALUATIONNicholas Brown | Associate DirectorThanussorn Aukkrararerksaponk |Manager
PATTAYA OFFICEMark Bowling | Sales ManagerSupannee Starojitski |Business Development Manager
The Knowledge Report | 2nd Quarter | 2010 | Bangkok Condominium Market