Condo market shifts to low-priced units

Condo market shifts to low-priced units

Developers poised to launch less pricey apartments in large numbers

An artist's rendition of Sena Kith Thepharak-Bang Bo, a lower-priced condo project Sena Development launched last year with units priced from 800,000 baht.
An artist's rendition of Sena Kith Thepharak-Bang Bo, a lower-priced condo project Sena Development launched last year with units priced from 800,000 baht.

The affordable segment is likely to dominate new condo supply in Bangkok this year as most developers are shifting to this large market despite a number of completed units remaining for sale.

Phattarachai Taweewong, research and communication director at property consultant Colliers Thailand, said 2021 would be the first year in the past five that new condo supply with affordable prices would be the most active segment.

"Condos with affordable prices of lower than 100,000 baht per square metre or below 3 million baht a unit will mostly dominate the market as developers plan to launch these units in large numbers," he said.

One such company is Sena Development Plc, which has eight new projects out of 17 set to launch this year that are condo units priced lower than 2 million baht.

Six of these eight projects feature units priced lower than 1 million baht in city fringe locations, including Bang Khae, Bang Bua Thong, Bang Pu, Theparak, Lat Krabang and Rangsit Klong 4.

"Condo units costing less than 1 million baht will replace townhouses in the same locations that are not affordable any more," said Kessara Thanyalakpark, Sena's managing director.

Other developers include Sansiri Plc, which plans to introduce four new condo projects with units priced from 1.29 million baht near Kasetsart University, CentralPlaza Bangna, Ratchayothin skytrain station and Ramkhamhaeng 12 MRT station.

"Feasible locations for affordable condos are city fringe areas where new mass transit lines are under construction. Those plots are more available for new development with lower land prices than inner city areas," said Mr Phattarachai of Colliers.

He said many projects will be located near educational institutions or shopping malls where demand is strong.

"Affordably priced units have the largest customer base. Most of the demand comes from salary earners," said Mr Phattarachai.

The Muve Kaset by SET-listed developer Sansiri. Sansiri plans to introduce four new condo projects soon with units priced from 1.29 million baht.

LOWER PRICE, BETTER SALES

Colliers expects more than half of the 4,500 condo units slated to launch in the second quarter this year will have price tag of 50,000-100,000 baht per sq m, or lower than 2 million baht a unit.

In the first quarter this year, 3,608 new condo units from 10 projects worth a combined 22.3 billion baht launched in Bangkok, down 38.6% from the same period last year. This represents two consecutive quarters of decline.

This decrease was attributed to developers shifting to low-rise houses and condo development in other provinces, such as Chon Buri and Rayong, he said.

However, the sales rate for condos improved to 48% from 39% in the fourth quarter of 2020 as some projects recorded 80% in the presales period, according to Colliers.

Some 46% of new supply in the first quarter was in city fringe locations or near new mass transit lines under construction. The largest number was near the Yellow Line, followed by northern fringe areas and inner city locations.

Condominiums alongside BTS skytrain. Some 46% of new supply in the first quarter were in city fringe locations or near new mass transit lines under construction. Pattarachai Preechapanich

About half were units priced from 100,001–150,000 baht per sq m at 1,800 units, followed by units priced between 50,001-100,000 baht and above 250,000 baht at 19.2% each. Another 10% had prices between 150,001-250,000 baht.

"The best seller in the first quarter were units priced between 100,000-150,000 baht per sq m as all of them came from big projects by large developers that wanted to replace units sold last year," said Mr Phattarachai.

"For the rest of this year, it will be a market for units priced lower than 100,000 baht per sq m."

During the past five years, the majority of new condo supply launched in Bangkok was priced between 100,000-150,000 baht per sq m, or higher than 3 million baht a unit, he said.

After the property tax incentives for units priced lower than 3 million baht were applied last year, new condo launches shifted to that price range as the inventories in this segment were absorbed.

INCENTIVE DRIVE

According to the Real Estate Information Center (REIC), the number of housing transfers for new condos priced lower than 3 million baht rose 1.1% from 2020 despite the pandemic.

"The incentives helped drain unsold inventory in this pricing segment last year," said REIC's acting director-general Vichai Viratkapan.

"The drop in inventory led to an uptrend in the condo price index in the first quarter this year."

The condo price index in Greater Bangkok rose slightly to 152.2 from 151.9 in the fourth quarter of 2020, the first increase in four quarters.

However, the index remained lower than the first quarter last year.

"This suggests the prices of new condos available in the market is focused on the same segment as last year," said Mr Vichai.

Colliers also reported the number of unsold condo inventory that is completed and ready to transfer totalled around 15,500 units as of the end of 2020, representing 26% of total unsold condo inventory in Greater Bangkok.

Some 36% were units priced between 100,000-150,000 baht per sq m, followed by 50,000-100,000 baht (31%) and 150,000-200,000 baht (21%).

Do you like the content of this article?
COMMENT (1)

Undammed, undimmed: the battle for Europe's last untamed river

TIRANA: Cutting into craggy mountains, meandering through plains and eventually hitting Albania's shimmering Adriatic, the Vjosa river's untouched landscapes are a national treasure, but one that is under imminent threat.

15:34

Japan to expand virus emergency as 350,000 sign 'Cancel Olympics' petition

TOKYO: Japan's government was expected to widen a virus state of emergency on Friday, just 10 weeks before the Tokyo Olympics, as campaigners submitted a petition with more than 350,000 signatures urging the Games be scrapped.

14:45

Players announce plan to keep All Blacks in Kiwi hands

WELLINGTON: New Zealand's Rugby Players' Association unveiled a funding proposal on Friday designed to keep the legendary All Blacks in Kiwi hands, sparking a furious reaction from administrators who are pursuing a deal with US investors.

14:45