Despite steady growth in a luxury condo market dominated by large developers, Pruksa Real Estate Plc, a property development subsidiary of SET-listed Pruksa Holding Plc (PSH), is opting for a cautious strategy by launching new high-priced projects in phases to reduce risk and avoid oversupply.
Prasert Taedullayasatit, the company's president of premium business, said launching and developing a new luxury condominium on a phase-by-phase basis can help reduce risk by staggering the supply flow over a certain period.
"For a large project, we don't need to launch everything all at once, but can gradually launch and develop it in phases," he said. "After the first phase is sold out or achieves a high sales rate, we can seek good sales for the next one."
This strategy will also benefit the project, as it can mark up selling prices, which will also satisfy buyers in the first phase, Mr Prasert said.
Pruksa has used this strategy for a new seven-storey luxury condominium on Sukhumvit Soi 61, where the company bought a seven-rai plot and launched the project's first phase on three rai late last year.
The first phase, The Reserve Sukhumvit 61, worth 2.5 billion baht, will have 186 units sized at 30.5-132 square metres, with prices starting at 230,000 baht per sq m.
According to the company's market research, condo supply in the Sukhumvit area has risen by 55% over the past three years, with market value of 30 billion baht in 2016.
"The luxury condominium market will continue growing this year because there are various demands driving its growth," Mr Prasert said. "They comprise real demand, investment demand and foreign buyers."
Mr Prasert, also president of the Thai Condominium Association, said the middle- to lower-end condominium segment will see some of the same pressures as last year, including the problem of high household debt that remains unsolved, a sluggish economy and higher living expenses.
According to the Real Estate Information Center (REIC), luxury condominiums with units priced over 200,000 baht per sq m saw the highest increase in selling price, with a year-on-year rise of 10-12% in the fourth quarter.
That was followed by the low-priced segment, with units priced below 50,000 baht per sq m seeing a rise of 2.9-3.9%. The medium- to high-end segment, with units priced at 80,000-120,000 baht per sq m, had an increase of 1.5-3.5%.
Condo units priced at 120,001-200,000 baht per sq m rose by 0.9-2.9%, while medium-priced condos priced at 50,000-80,000 baht per sq m fell by 0.5-1%.
The REIC also reported that prices of new condominium supply launched in Bangkok, Nonthaburi and Samut Prakan in the fourth quarter of 2017 rose 6.3% year-on-year. Those prices further increased 2.4% from the previous quarter.
The quarter-to-quarter increase in the price index for new condominiums launched in Bangkok alone was higher than that for the other two provinces, which rose 2.6% and 1.8%, respectively.
The top five locations with the highest year-on-year increases in condo prices in the fourth quarter included Samut Prakan, rising 20.9%, Pathumwan (20.3%), middle Sukhumvit (20%), lower Sukhumvit (18.2%) and Huai Khwang-Chatuchak-Din Daeng (18%).