Nexus: Condo buyers eyeing quality rather than quantity in 2017
A KEY shift in the New Year will see condo buyers focusing more on quality than quantity while supply will increase by 10% with most of it being in city fringe and outer areas of Bangkok, Nalinrat Chareonsuphong, managing director of Nexus Property Marketing Company said yesterday.
While price is not a key factor at the rarefied super-luxury end of the market, a step or two lower at the luxury and high-end segments the focus is now on price and value of the product besides location.
As some developers delayed launching new products till the New Year, there should be some activity in January.
Listed developers should continue to develop at the same pace and spread their projects across various segments. However smaller and mid-sized developers will stress product features and ideas as well as construction quality.
“This year we have seen more medium-scale developers entering joint ventures with foreign partners which reflect stronger financial background and better product technology.
“Several infrastructure projects also made progress in 2016 and this will contribute to real estate market growth in 2017,” Ms Nalinrat said.
Nexus conservatively estimates that average condo price will rise by 6-7% but this will be higher in the city area where it could spike by 9-10%.
This well-known real estate agency categorizes the Bangkok condo market into five segments with prices being as follows:
- Super-luxury – from 250,000 baht/sq.m;
- Luxury – between 180,000-250,000 baht/sq.m;
- High-end – between 100,000-170,000 baht/sq.m;
- Middle market – 70,000-100,000 baht/sq.m;
- City condo – lower than 70,000 baht/sq.m.
New condo supply in the super-luxury sector of the market will mostly be built by well-known developers and excluding 98 Wireless where the price is higher than 700,000 baht a square meter some new supply in 2017 will be above 450,000 baht a sq.m.
“In 2016, high-end condo developed by listed developers continued doing well as they have investment buyers as regular customers and channels to re-sell the units for them. However, this market needs to be watched in 2017 as to whether demand will continue or not.
“For city condo market, each location has different price range and demand but price remains a key factor for decision making, therefore any price increase will be slightly limited in this segment. When costs soar, unit size becomes a key factor in developing a product that matches the affordability of this market segment,” Ms Nalinrat said.
Nexus sees two attractive locations for super-luxury condo development with these being Ploenchit/Chitlom/Lang Suan and Thong Lor/Sukhumvit 39-49.
When it comes to the luxury segment, lower Phahonyothin, Riverside and Phayathai will be the appealing centers.
“Locations along the Orange, Yellow and Pink lines are eye-catching areas for new condominium development.
“Pink Line, particularly Chaeng Wattana area, is interesting because of limited new supply launches compared to other zones of Bangkok.”
Bangkok’s low-rise housing market
Development of luxury houses in good locations within the central city area will continue to increase with location and premium quality being the key to success, Ms Nalinrat said.
Similar to the super-luxury condominium segment, price is not a key factor with function and prestige that meets the buyer’s objectives being more important.
Single-detached houses priced between 5 to 10 million baht in convenient locations look promising in 2017, she said, adding that townhouses in city-center areas in the same price range should also attract attention. Buyers of both varieties of housing mostly have a family and stable income and need more space than condominiums.
Townhouses priced lower than 3 million baht cater to the mass market and growth should continue in the New Year. However similar to the city condo market, affordable price and value are the key factors driving this market.
A bigger issue for this segment in 2017 is household debt and the ability to get mortgage.
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Top: Ms Nalinrat says mid-level developers are linking up with foreign partners.
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