Condo market set to recover

Condo market set to recover

Rising land costs, new lines driving demand

Launches of condominium units, which slumped by 25% in the first 10 months this year, will recover in 2015 driven by higher land costs and new mass transit lines, says the Real Estate Information Center (REIC).

Plasterers work on a condominium on Sukhumvit Soi 107. Condos are popular because of their convenient locations and affordable prices, says the REIC. (Photo by Somchai Poomlard)

Director-general Samma Kitsin said condos remained popular among homebuyers because of their convenient locations and affordable prices.

"Rising land costs will drive homebuyers to choose a condo unit rather than a low-rise one in the same location," he said. "Condos at a more affordable price are usually located closer to mass transit lines."

The REIC estimates the number of newly launched condo units this year will total about 65,000, down 23% from the record high of 85,000 last year.

In the first 10 months, 56,300 condo units from 132 projects were launched in Greater Bangkok, down 25% from 75,600 units from 178 projects year-on-year.

Meanwhile, the number of low-rise units (single houses and townhouses) rose 8% to 37,900 from 218 projects. The increase was largely due to many new roads in Greater Bangkok, said Mr Samma.

Low-rise units are expected to total around 45,000 this year, the same as last year.

About 110,000 housing units will be launched in Greater Bangkok this year, down from 130,000 last year.

The top five locations for condo launches were Thon Buri with 11,700 units, Nonthaburi (7,250), Huai Khwang-Chatuchak-Din Daeng (5,350), Bang Sue-Dusit (4,000) and Pathum Thani (3,900).

"In the previous three years, Nonthaburi had been ranked No.1 for newly launched condo units with around 10,000 each year as the Purple Line was under construction. This year Thon Buri has taken top spot because the Blue Line has started construction," Mr Samma said.

The top five locations for launches of low-rise units were Samut Prakan with 8,500 units, Bang Kruai-Bang Yai-Bang Bua Thong-Sai Noi (6,400), Lam Luk Ka-Khlong Luang-Thanyaburi-Nong Sue (5,000), Min Buri-Nong Chok-Klong Sam Wa-Lat Krabang (4,200) and Bang Khen-Sai Mai-Don Muang-Laksi (3,000).

SET-listed developer Pruksa Real Estate Plc launched the largest number of both condo and low-rise units with 7,600 units from 14 projects and 10,500 units from 42 projects, respectively.

Listed companies' share of the overall housing market dropped to 66% from 71% last year. Their share of the condo market dropped to 60% from 72% but their share of the low-rise segment increased to 73% from 67%.

"Small and medium-sized non-listed developers have launched more condo projects than listed counterparts possibly because environmental impact assessments are not required for small projects but are required for large ones," Mr Samma said.

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