Bangkok shows resilience
Bangkok's property market has been hit by political mayhem, floods and the global economic downturn, but it keeps bouncing back stronger than ever.
Even last year's catastrophic flooding has had a positive effect for developers, as more buyers switch focus from townhouses to high-rise condominiums so that they will not be affected by future floods.
According to Real Estate Information Centre data, 36,400 condominium units were released in the first half of this year, compared with only 12,500 low-rise single houses or townhouses.
Centre director Samma Kitsin says the low-rise sector is recovering slowly from the floods. Larger developers are putting more resources into condominium projects, with listed developers launching 70 per cent of units in the first half.
Foreign developers are also getting in on the act. Two separate condominium projects with a combined value of 6 billion baht (HK$1.46 billion) will be launched in October in the Ratchadaphisek and On Nut areas of Bangkok. They are being funded by a Chinese contractor and a Taiwanese developer whose identities have not been disclosed.
Monchai Orawongpaisan, senior manager for project sales at property consultant Colliers International Thailand, told the Bangkok Post that the projects' investors were optimistic about Thailand's potential as a key player in the Asean Economic Community. The country's low living costs, good standard of living and geographical location are expected to bring an influx of regional residents when the community launches in 2015.
Developers are also preparing to buy land worth more than 100 billion baht near the Mass Rapid Transit Authority's Purple Line and Blue Line railway extensions, that are due to launch in 2015.
Improvements in Bangkok's transport infrastructure have brought sharp price rises for properties near BTS Skytrain or MRT subway stations. Condominium units near Sala Daeng station in Silom, which is a BTS-MRT interchange, more than doubled from 124,000 baht per square metre in 2009 to 250,000 baht per square metre last year.
Statistics from Knight Frank Thailand show there are about 12,100 apartments occupied by expatriates in Bangkok, of which 70 per cent are in the Sukhumvit area. Central Lumpini and Silom/Sathorn are also popular with foreigners.
The most eye-catching luxury development launched recently is Magnolias Ratchadamri Boulevard, which will comprise 316 residences and a five-star hotel, Waldorf Astoria Bangkok, when the project is completed in 2015.
The residences alone have a project value of 5 billion baht. The units range from apartments of 48 to 80 square metres to penthouses and duplex penthouses of 250 to 360 square metres. Prices range from 8 million baht to 80 million baht for a 30-year leasehold. Features include a residents' lounge, private club, concierge, garden-view library, jogging track with garden and a 70-metre pool with a jacuzzi and children's area.
Magnolias is designed to meet the latest environmental standards. It features an architectural 'petal' that spirals along the full height of the 54-storey tower.
Thanawan Chaiwatana, managing director of Magnolia Finest Corporation, says he expects the project's quality and location to attract great interest.
'We have received very positive feedback from Thais and foreigners,' he says. 'We expect at least half of purchase interest to come from foreigners. We are planning roadshows in Hong Kong, the mainland, Singapore and Malaysia due to the high levels of purchasing power and demand for second homes there.
'There are very few truly high-end projects on the market now, but there is strong demand given the right project, the right quality and the right location. Magnolias is a very high-quality build in an unmatched location offering a luxurious lifestyle amid the city's best residential, dining, business and entertainment areas.'
Raimon Land netted 300 million baht at its two-day annual sale in early July, driven largely by The River, its upmarket project alongside the Chao Phraya River in Bangkok.
The listed developer is planning to spend 1 billion baht to buy two plots of land in Bangkok to develop two new condominiums with unit prices above 5 million baht. Raimon Land says supply in this price range is limited and its own market research revealed that only 4 per cent of units launched in the city in the first quarter were priced above 5 million baht. About 80 per cent of new launches were studios or one-bedroom apartments in new locations.
'Condominiums remain our focus, and this segment has recovered since the flooding,' says Raimon Land's CEO Hubert Viriot.
Bangkok office rents are also on the rise. The average rental rate of grade-A office space in the central business district increased by 4.9 per cent in the first quarter year on year.