Strong demand seen for large condos
Demand for larger condominium units in the resale market is poised to remain strong this year as the prices of new projects in Bangkok are still high despite their smaller sizes, according to property consultant CBRE Thailand.
Praphinleeya Phuengkhuankhan, head of the residential sales ad hoc team at CBRE Thailand, said condo buyers were looking for larger-sized units in good locations at reasonable prices.
"Most of the buyers in the resale market are end users purchasing a unit for their own use rather than speculating for short-term profit," she said.
Resale condo buyers are interested in spacious units where they can have a separate working area from the living area. The resale market of older buildings meets those needs.
In 2021, the best-selling resale condo units were those with two bedrooms sized 80 to 130 square metres, followed by three bedrooms sized 200 to 360 sq m and one bedroom sized 67 to 84 sq m.
This also suggested that the unit size for each bedroom type in the resale market of older buildings was larger than newer buildings where one bedroom is now sized 35 to 50 sq m, while two bedrooms are only 55 to 90 sq m and three bedrooms are 90 to 140 sq m.
The most popular locations of resale condos last year were Sukhumvit, Sathon, the central business district, and riverside areas, or Charoen Nakhon and Charoen Krung roads.
Ms Praphinleeya said the resale market price of all projects in the same locations was not adjusted equally as price was determined by a building's quality, water and power systems, and the maintenance of the building to ensure that it did not deteriorate with time.
"Any building with these characteristics is more resilient than other buildings in the same location. The price and the popularity can be higher than those of the same age," she said.
"The price of each project will reflect the market demands of buyers and sellers at that particular time."
The most important elements that affect growth in demand for the resale market include buyers' need for a large living space in a popular location and their budgets.
"The Covid-19 situation has had some positive effects in terms of allowing rare units that weren't typically found in a normal market to become available for sale again," said Ms Praphinleeya.
- 2021 resale market -
The overall resale condo market last year was divided into phases, based on the impact of the pandemic.
In the first quarter, the resale market was positive because the number of vaccinated people gradually increased.
More people visited projects and actively negotiated prices, compared to 2020 when all property sectors were hit hard by strict Covid-19 measures.
This was especially the case with projects that were completed and could not sell all the units in their inventory.
Some developers adopted a sales strategy of reducing unit prices to increase sales and generate cash flow.
This had an impact on the entire resale market as buyers started to believe that all unit prices in the resale market should be reduced as well.
However, buyer interest began to slow down in the second and third quarters of 2021 due to new variants.
The new waves caused buyers to reschedule appointments, particularly buyers who lived with older people or young children. They also delayed making decisions.
The market recovered in the fourth quarter of 2021 as pent-up demand resumed, especially for the high-end segment.
"Buyers had a better understanding of the resale market, where prices are determined not only by demand and supply of each project and/or the size of units, but also the unique needs of the sellers."
Based on previous sales figures, properties that were sold at market price or lower-than-market price were those under financial pressure.
- Resale advantage -
Ms Praphinleeya said the advantage of the resale market is that buyers can check the condition of the actual unit, including common areas and building maintenance, before making a choice.
Low fees for common areas and building maintenance are important elements that keep old buildings attractive for residents and sellers.
Some speculators hoped to profit by selling unit contracts while buildings were under construction or almost complete, but if that contract could not be sold, they were willing to keep the unit for themselves.
Potential buyers of this type of resale are mostly end-users who prefer to see the real unit before purchasing. This is another advantage as buyers can visit the site and negotiate a price with owners who want to sell.
However, buyers must be decisive as the project itself will often have a limited time period on the ownership transfer and there may be other buyers looking around for good deals.
If the unit has been transferred, there will be additional tax charges and transfer fees, which will incur costs for both sellers and buyers.
The limitation of this type of resale is that there may be less variety of units available in the market.