Vigorous property market on the horizon

As a key finding, the report reveals that investor confidence in Thai real estate remains strong despite rising construction costs for developers and higher lending costs for homebuyers. Listed developers’ presales of condominium projects in Bangkok and Pattaya climbed to THB 22.6 billion during the second quarter of 2011, a steady doubling from the first quarter’s THB 11.3 billion tally.
Property developers expect vigorous market activity into the second half of the year, thanks to a strong pipeline of upcoming new projects, rising consumer confidence and a more stable political situation.
As Bangkok’s mass transit system expands, a trend is being created around the city’s fringe area by a growing number of Thai buyers, especially among the young, who now prefer condominiums over houses. The inner-city market has been energetic with 61 projects under development, totaling 16,730 units, with 38 projects launched in the past 12 months alone yielding 9,701 units. The pace of transfers compared to new completed condominium projects remains balanced with 83 percent of the units sold before completion.
“The first half of the year has been particularly good for developers,” noted Simon Dervillé, Raimon Land deputy vice president for Business Development. “A record number of 3,528 units was sold in inner-city Bangkok, with 53 percent of all units launched over the past 12 months finding buyers–that leaves us with a cumulated amount of 6,000 units under development to sell. The days when developers were selling out in a day are behind us, but 10 months to turn the inventory is still a very healthy number.”
Central Lumpini remains the highest-priced area in the CBD, with prices reaching 151,171 baht per square meter, followed by Silom/Sathorn and Sukhumvit at THB 137,018 and THB 108,036 per square meter, respectively.
Positive Market Sentiment in Pattaya
The condominium market in Pattaya has also experienced a surge over the past 12 months, especially in the THB 3 million and below bracket, as more developers turn towards smaller-sized units catering to buyers looking for weekend homes. Twenty-six projects were launched over the past 12 months for a total of 10,000 units, with 47.1 percent of units taken to date, a strong indicator of the depth of the market outside of Bangkok.
“Thai buyers still account for the majority of our sales in the Pattaya market. And now that Europe faces financial and currency issues, buyers from South Korea, China and Taiwan are quickly turning into our second largest group of customers,” added Dervillé.
The Condominium Focus Thailand also revealed that North Pattaya, especially along Wongamat Beach, remains the most valuable area for condominium projects with an average sale price of THB 87,840 per square meter. This is relatively high compared to other areas in Pattaya where land is still abundant and the market more competitive in terms of price. Growth areas are likely to remain concentrated in South Pattaya, as well as near Sukhumvit Road, where the demand from local residents who work in the area is surging.
Condominium Focus Thailand is a research publication aimed at providing investors and industry observers with an accurate insight into supply, completions, off-plan sales and transfers.
The report covers condominium projects launched since 2003 in Bangkok and Pattaya that have a majority of units priced at over THB 2 million. Raimon Land collects this data by surveying the projects listed in the publication on a monthly basis through a variety of sources comprised of site visits, interviews, press articles, investor research on listed companies and other research agency reports.
The data catchment area of inner-city Bangkok includes Sukhumvit, Silom/Sathorn, Central Lumpini, and Riverside locations, whereas in Pattaya, it includes the areas from Naklua to Na Jomtien.