AN interesting change took place in the Bangkok condominium market in 2016 with supply dropping by 25% compared to the previous year while sales also dipped, Nalinrat Chareonsuphong, managing director of Nexus Property Marketing Company said this week.
The decreased supply in the outgoing year, totaling 40,000 units from 94 projects compared to 53,000 units launched in 2015, is seen to be good for the industry as it allows the backlog to be absorbed.
Nexus’ in-depth research shows that the three locations that attracted the largest number of units in 2016 are Phra Khanong, Suan Luang (10,700 units); Phaya Thai, Ratchadaphisek (9,200 units) and Ngamwongwan, Tiwanon (6,900 units) with these projects adding up to 67% of 2016’s total new launches.
However, this market took a remarkable turn in the fourth quarter with launches decreasing because developers delayed their projects.
Despite this Ms Nalinrat pointed out that 70% of this year’s launches took place in the second half of the year with this indicating that developers continue to remain confident of the growth of Bangkok condo market.
Demand likewise weakened this year with new condo sales totaling 46,100 units or around 10% less than the five-year average of 51,200 units per year.
Even so it is worth noting that this year’s demand is higher than the new supply and new projects recorded average sales of 64%.
Nexus’ research also shows that average condominium prices rose by 14% from 106.000 baht a square meter to 121,000 baht.
This rise is significantly higher than the five-year average of 8% per annum. The luxury downtown segment saw a steeper climb than outer areas with price hikes in central areas being 15-16%.
“Condo price at every new project launched in the central area of Bangkok is higher than 150,000 baht per sq. m. Key factors remain land cost, which soars in every location, and other development costs also continuing to rise,” Ms Nalinrat said.
Prices of new condos in city fringe areas surrounding the city center also jumped significantly with key areas being Din Daeng, Phahonyothin, Phra Khanong and Prachachuen.
Nevertheless prices of new launches in outer areas only increased moderately at around 8%.
Ms Nalinrat mentioned that some developers who are able to rent out their units are offering guaranteed return to buyers to speed up sales and this was relatively successful in 2016.
Top: Ms Nalinrat says while both supply and demand weakened in 2016, demand outstripped supply.