Year of revival for low-rise housing
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Year of revival for low-rise housing

Pandemic has brought lifestyle changes and increased demand for bigger spaces, according to CBRE

Chotika Tungsirisurp, head of research and consulting, CBRE Thailand
Chotika Tungsirisurp, head of research and consulting, CBRE Thailand

After more than a decade of consistent growth in the supply of condominiums in Bangkok, 2022 marked a return of low-rise housing as the home of choice for Thai buyers, according to the international property consultant CBRE.

In 2021 the supply of new low-rise housing exceeded that of the new condos in the Bangkok metropolitan region for the first time since 2011. In 2022, although the supply of low-rise housing increased by at least 25% from the previous year, there was also an increase in new condo supply, especially in midtown and suburban areas, targeting the first-time worker market.

The residential market posted strong levels of activity overall, and while most activity in the condo sector remained focused on the midtown and suburban markets, many developers appeared positive about plans to launch new condos in downtown Bangkok. Despite this optimism, confirmed downtown condo launches have remained limited.

A key feature of the low-rise housing market in 2022 was the increasing number of luxury and super-luxury housing projects launched. The impact of the pandemic increased demand for larger spaces that have specific functions for new ways of working and living.

CBRE Research found most newly launched luxury and super-luxury housing projects in 2022 were concentrated in eastern Bangkok, primarily along Krungthep Kreetha, Pattanakarn, Srinakarin and Bang Na roads. Examples included Malton Gates, Aliyah Reserve, Park Heritage and Nirvana Collection.

The luxury and super-luxury market has proven resilient during the pandemic, and this year we will see even more units for sale in the luxury and higher grades, such as Grand Bangkok Boulevard by SC Asset and Narasiri by Sansiri.

This new supply of luxury housing with better design and functionality will make developer-built units more popular, said CBRE. Entry-level, low-rise housing projects, especially townhouses, are competing for market share with mid-range condos in the midtown/suburban area.

As land prices continue to rise, many newly launched midtown condo projects have asking prices similar to those of townhouse units located not far away. Additionally, the changing lifestyles of homebuyers raise questions about the necessity of living in the city, said the consultancy.

"Many potential buyers have adapted to new ways of working. They have taken up new hobbies and made plans to start a family. These changes require the kind of space a condo unit generally cannot offer," said Chotika Tungsirisurp, head of research and consulting with CBRE Thailand.

"Buyers are willing to locate themselves farther from the city to access the larger living space of low-rise housing, knowing that such homes cost roughly the same as smaller, downtown condo units.

"This scenario is also playing out in the luxury housing market in the midtown area, which now competes with high-end condo units downtown. Again, while the price point is often similar, the key is very few condo developments provide large, family-sized units, something that developers have addressed in their low-rise housing products."

In contrast, in the downtown condo market, developers are cautious about introducing new projects to the market while existing unsold inventory remains. Beyond the competition between low-rise housing and condos, the downtown market has been seriously affected by the weakened spending power of buyers, together with lower numbers of foreign buyers, especially Chinese.

The market continues to be price-sensitive, focusing on domestic buyers, according to the consultancy.

"Significant challenges remain for the residential sector, as the temporary loan-to-value relaxation measures expired at the end of 2022, and elevated construction costs are eating into developers' margins," said Ms Chotika.

"Rising consumer debt levels and the lack of investor demand will continue to impact not only project sales rates, but also developer confidence in launching large-scale projects."

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