With the completion and registration of 2,270 new condominium units with the Lands Department in the third quarter of this year, Bangkok is now home to 337,580 condo units, with no apparent let-up in demand and development. A shortage of construction labour is the main factor delaying the completion of some projects.
The latest statistics reflect the gradual change in development patterns in the capital. As of Sept 30 this year, 209,600 condominium units or around 62% of the total supply were located in suburban Bangkok, defined as areas beyond the reach of the current mass-transit system. The remaining 128,300 units were located in urban Bangkok. Within urban Bangkok, the northern fringe area has the highest number of units due to its proximity to the city's main business districts, mass-transit connections and relatively lower land prices compared to the city area. Outer city areas are appearing on the radar screen due to the extension of the BTS across the Chao Phraya River to the west, and further eastward along Sukhumvit Road into Samut Prakan province.
NEWLY LAUNCHED DEVELOPMENTS
Approximately 8,600 units were launched in the third quarter compared to 9,920 in the second quarter of 2012. More than 54% of the total units launched in the third quarter were in the urban Bangkok area. Within this area, the city area had the highest number with 1,760 units or 20% of the total. The northern fringe followed with nearly 1,200 units. Nearly 880 units, or around 50% of all units launched within the city area in the third quarter, were located along Sukhumvit Road.
FUTURE SUPPLY
Approximately 26,000 units are scheduled to be completed within the urban Bangkok area during the last three months of this year. The northern fringe area continues to be the main player in urban Bangkok, with nearly 10,100 units scheduled for completion by year's end. The city area follows with 4,580 units. About 27,900 units are also expected to be completed this year in suburban Bangkok. But completion may be delayed until next year due to a construction labour shortage.
TAKE-UP RATES
The average take-up or sales rate in Bangkok for condominium units launched during the third quarter of 2012 was 64%, though this jumped to a high of 84% in the city area. Some condominiums in the city area sold out quickly due to proximity to a BTS station and the quality of the units on offer despite an average price of 110,000 baht per square metre. Other condominiums located away from mass-transit lines also received good feedback from buyers due to cheaper prices, especially if they were close to shopping malls or future extensions to mass-transit lines.
Location is, of course, the major factor determining the take-up rate of a condominium development. All buyers focus on developments near the BTS or MRT stations if they can afford them. The take-up rate of projects less than 200m from a BTS or MRT station is the highest, at around 85%. Projects located further than 1,000m from a station have the lowest take-up rates. This is because the total number of newly launched units in this area is higher, at 6,000, than other locations where the number is between 4,800 and 5,950 units. Although the take-up rate was only 58%, the number of units involved, 3,600, was still higher than in other locations.
SELLING PRICES
The average selling price of newly launched units in the third quarter of this year in the city area was the highest, at more than 130,000 baht per square metre at some new high-end projects, followed by the eastern fringe area at 106,500 baht per square metre at some new projects on Sukhumvit Road. The suburban Bangkok area has the lowest prices at 45,000 baht per square metre, 13% lower than in the previous quarter as most newly launched units in the third quarter were further from BTS extensions.
Condominiums located close to BTS or MRT stations are usually the most expensive. Projects less than 200m from a station are the dearest, at around 170,000 baht per square metres. Those located more than 1,000m away from a mass-transit station are the cheapest at only 54,500 baht per square metre. The average selling price in all locations is approximately 13% higher than in the previous quarter, especially projects 500m to 1,000m from a BTS or MRT station, which increased by 37%.
FORECAST
The capital's condominium market in the second half of this year continued to grow from the first six months, although the total number of units launched in the third quarter is lower than in the second quarter. Many condominiums are also scheduled to be launched in the final quarter, which will result in more total units launched this year than last.
As there is limited available land at suitable prices in the city area, especially on both sides of Sukhumvit Road, some developers are focusing more on low-rise condominiums on smaller plots in smaller sois. Low-rise condominiums are becoming more prevalent now and will remain so in the future in other locations.
As certain listed developers that have launched condominiums outside of Bangkok are receiving better feedback than expected from locals, they are gearing their attention toward new markets outside the capital in the near future, while keeping their market share in Bangkok. Chiang Mai, Pattaya, Hua Hin, Phuket, Khon Kaen, Khao Yai and Hat Yai are the major business cities in Thailand and are where condo developers are set to compete.
Some big-name developers in Thailand are also searching for new opportunities abroad, especially in Asean countries including Indonesia, the Philippines, Vietnam and Myanmar.
Surachet Kongcheep is senior manager of research of Colliers International (Thailand). He can be reached at surachet.kongcheep@colliers.com