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RESIDENTIAL RESEARCH

BangkokcondominiUm market Q2 2015

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Source : Knight FranK thailand reSearch and conSultancy department

Market Overview

the Bangkok condominium market in the second quarter of 2015 continued to grow despite concerns over the spill over effects from the thai economic downturn and rising household debts. the supply from the peripheral Bangkok areas dominated the market with new launches, now constituting 73% of the total supply as land scarcity and land cost are the main obstacles for developers. demands from affluent buyers remained strong as high end condominium with average selling prices of tHB 150,000 baht per square metre from reputable developers in prime locations did not take long to sell out, whilst the segment with slowest growth is the mid-market condominium segment located further away from public transport modes. Prices were still on the rise, especially for the super-luxury market.

Supply Trendthe Bangkok condominium supply at the end of Q2 2015 amounted to 362,697 units, representing a 4.2% increase

HigHligHts

Please refer to the important notice at the end of this report

riSinee SariKaputradirector, research and consultancy

• TheaccumulatedsupplyofBangkok condominium as of Q2 2015 was 362,697 units, representing a 4.2% increase Q-o-Q and 23.9% increase Y-o-Y.

• TotalnewlaunchesinQ22015 were 20,780 units, of which 15,195 units or 73% were from the peripheral of Bangkok, followed by the city fringe area and city area, with approximately 21% and 6% of the quarter’s supply, respectively.

•the accumulated demand of Bangkok condominium was 309,388 units out of the total supply of 362,697 units, representing the take up rate of 85.3% as of the second quarter of this year.

• Theaveragesellingpriceofcondominiums in the city area in Q2 2015 was tHB 212,588 per square metre, a 7.1% increase Q-o-Q and 18.5% increase Y-o-Y.

from the previous quarter and a 23.9% increase from the same period last year. so far this year, 34,439 units from 71 condominium projects were added to the stock, of which 20,780 units from 37 condominium projects were launched in Q2 2015 alone. Figure 1 below shows the cumulative Bangkok condominium stock from 2009 to Q2 2015.

the majority of new launches were still in the peripheral Bangkok area, representing 73% of the Q2 2015 new supply, followed by the city fringe area and the city area at 21% and 6% of the Q2 2015 launches, respectively, as shown in Figure 2. only around 1,242 units were launched in the city area due to the scarcity of land available for development and the cost of land acquisition, which is currently at its peak. most newly launched projects in the city area were therefore grade a projects and above in order to justify the prices, which had factored in the land cost.

a similar trend could be observed in the city fringe area where new developments with convenient access to mass transit systems were starting to shift to the upper-end market to justify higher land

Figure 1

Bangkok Condominium Stock and New Supply, 2009 to Q2 2015

“the Bangkok condominium market in the second quarter of 2015 continued to grow despite concerns over the spill over effects from the thai economic downturn and rising household debts.”

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RESIDENTIAL RESEARchBANGKOK cONDOMINIUM MARKET Q2 2015


Figure 2

Bangkok Condominium Supply by Location, Q2 2015

Figure 3

Supply, Demand and Take-Up Rate of New Launch 2010 to Q2 2015

cost. out of the 7 projects launched in this area, 5 of them were grade a condominium projects. in terms of units, 77% of the units in the area were grade a.

larger scale condominium projects were mostly developed in peripheral Bangkok, some in areas nearer to the future transit stations such as aspire erawan, with 1,576 units located only 50 metres away from the erawan museum station, which is due to open in 2020; or lumpini mix theparak – sri nakarin with 2,041 units located near the future mrt Yellow line route.

Demand Trendoverall, the take up rate has increased from the end of 2014, from just 84% to 85.3% during the second quarter of this year. By the middle of this year, the condominium unit sold was approximately 309,388 units out of 362,697 units. there were approximately 53,309 units available for sales, of which around 38,163 units were the available units in the Peripheral Bangkok, whereas the available units in the city Fringe were 9,978 units and the available units in the city area were only 5,168 units.


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Pricing Trendthe prices of newly launched condominium projects continued to climb up throughout Bangkok but at different paces, depending on location. in the cBd, prices went up at a much faster rate due to land scarcity and the influx of super-luxury projects that opened at prices above tHB 250,000 per square metre, such as the Four seasons Private residence, nimit langsuan, tela thonglor, and Q sukhumvit. the average selling price in this area was tHB 212,588 per square metre in Q2 2015, an increase of 18.5% over the price in Q2 2014.

similarly, the city fringe area saw a bigger increase in price over the last few periods. in Q2 2015, the average selling price in this area was tHB 127,578 per square metre, representing an increase of 15.6% year-over-year. cost of land near major roads and along the mrt routes was the main factor of the price increase. this is particularly more pronounced on ratchadapisek road, the new home to the stock exchange of thailand and many large commercial developments, including the new central rama iX shopping mall and thailand’s newest tallest skyscraper, the super tower.

Outlookthe slowdown in Bangkok condominium demand continues to be contained in specific regions. condominium markets within the city and city fringe areas have potential to grow even further. the area of concern is in peripheral Bangkok, where many of the recently launched projects are overpriced. in other words, their prices match comparable units in the city fringe where access to transport modes and the cBd is more convenient. the scarcity of land in the city and prime city fringe areas would force prices up further. most cBd developments on the last few plots of land would be super-luxury projects, and developers would prefer slow release of inventory to benefit from the capital gain—or super-luxury units sold on the leasehold ownership structure on prime government land.

Figure 4

Bangkok Condominium Average Selling Price, 1H 2008-Q2 2015


Appendix: Condominium Location•CityArea:ThisistheCentralBusinessdistrict area as well as its surrounding areas. it is popular for expatriates, tourists and upper class thais for both for shopping and residence. it also includes areas along the chao Phraya river on charoen krung and rama iii roads. the city area can be divided into sub-areas asfollows:

oCentralBusinessDistrict(CBD):this is the area that encompasses sathorn road, silom road and Wireless road cBd corridors. it is an established business location with quick access to sukhumvit, rama 3 and the riverside areas.

oSukhumvit:Thisisthesectionofsukhumvit road between soi 1 to 63 (north side) and soi 2 to 42 (south side) and the entirety of rama i and Ploenchit roads. the area is popular with expatriates, tourists and affluent thais.

oRamaIIIandtheRiverside:Thisisthe area that stretches along charoen krung road of the chao Phraya river southward just past the sathorn Bridge, and to the north of sipraya road as well as the area along both side of narathiwas road and portions of charoen nakhon road immediately next to the taksin Bridge.

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H1 2015 logistics Property market

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GLOBAL BRIEFING

Thailand Contacts

Phanom Kanjanathiemthaomanaging director+66 (0)2643 8223 ext [email protected]

Chaturawit Wattanaprukexecutive director+66 (0)2643 8223 ext [email protected]

Surasak Limpa-Arayakulexecutive director, Head of Valuation and advisory+66 (0)2643 8223 ext [email protected]

Roong Sitthisankunchornexecutive director, Head of Property management+66 (0)2643 8223 ext [email protected]

Marcus Burtenshawexecutive director, Head of commercial agency+66 (0)2643 8223 ext [email protected]

Frank Khanexecutive director, Head of residential +66 (0)2643 8223 ext [email protected]

Risinee Sarikaputradirector, research and consultancy+66 (0)2643 8223 ext [email protected] Phuket ContactNattha Kahapanaexecutive director, knight Frank Phuket+66 (0)7631 8151 ext [email protected]

•CityFringeArea:Theareaislocatedonthe edge of the city area, and provides easy access to the city area. this area is an alternative for condominium buyers due to the convenient access to many shopping and transportation centres. the city Fringe area can be divided into the followingsub-areas:

oRatchada-LadpraoArea:Thisisthearea with close proximity to the Blue line mrt stations covering both side of ratchadapisek road and the beginning of ladprao road to the West.

oPhahonyothinArea:Thisistheupandcoming area that offers a convenient access to many academic institutions and government agencies. the area covers Phahonyothin road between soi 1 to 13, and soi 2 to 14.

oLate-SukhumvitArea:Thisisalsoanother up and coming area that is currently very popular with many young local and foreign professionals and major condominium developers. it covers sukhumvit soi 63 to 81 and 42 to 50.

•BangkokPeripheralArea:Thethreemajorareasunderthisclassificationare:

oOuterSukhumvit:Thisisthesectionof sukhumvit road on both sides after sukhumvit soi 81, stretching to the Bangna intersection.

oThonburiArea:Thisistheareacoveredby the new Bts extension on the silom (light green) line from saphan taksin to Bang Wa.

oOtherAreas:Theseareasareoutsideof the areas already mentioned. most of the remaining condominium areas are scattered across the city, including srinakarin, chaengwattana, kaset-navamin, Petchakasem, samutprakarn sukhumvit, etc.

Appendix: Condominium Classification

•Premium:o the location is in the city area.o the selling price of the unit must be at least tHB 170,000 per square metre.o the majority of the units in the project must be over 50 square metres.o the common facilities and unit decoration must be of very high standard or iconic.

•GradeA:o the location is in the city or city Fringe area.o the selling price of the unit must be within the range of tHB 120,000 – 169,999 per square metre.o the common facilities must be of high standard.

•GradeB:o any location in Bangkoko the selling price of the unit must be within the range of tHB 80,000 – 119,999 per square metre.

•GradeC:o any other condominium projects that do not qualify for the classification mentioned earlier.

H1 2015Logistics Property Market

research

• Thetotalsupplyforwarehouserentalspacewasabout3,468,530squaremetres,increasingby3%. Thenewsupplythatenteredthemarketwasonly101,327squaremetres.• Theoccupancyratedroppedto78%from79.8%inthepreviousyear.TheEasternSeaboardareastill hadthelowestoccupancyof57.7%.• Onaverage,thewarehouserentalrateslightlydecreasedby0.51%to159.8bahtpersquaremetre permonth.TherateintheEasternSeaboardareadroppedthemost,by4.1%.

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H1 2015Manufacturing Property Market

research

highlights

• IndustriallandsalesinH12015were1,404rai,deceasingfromthepreviousyearby2.3%duetoa sluggishrecoveryintheThaieconomyandcontractionoftheexportsector.• Factoryoccupancyratesstoodfirmat77.1%inH12015,areductionof0.5%yearonyear,witha dropinalllocations.• ThehighestfactoryrentalrategrowthwasseenintheEasternSeaboardwithanincreaseof0.9%; however,therentalratesinotherkeylocationsalsoslightlyincreased.

H1 2015 manufacturing Property market

Q2 2015 Bangkok office market

Q1 2015 BangkokcondominiUmmarket oVerVieW

Q2 2015 Bangkok Office Market

research

• Bangkok’sofficesupplyincreasedto4,661,188squaremetres.Duringthefirsthalf of2015,theofficesupplyincreasedby86,000squaremetres.• Overfouryears,thenettake-upofofficespacerecordedanewhighinthefirsthalfof 2015atapproximately133,359squaremetres.Weanticipatewitnessingthenettake-up ofofficespaceexceed200,000squaremetresforthewholeof2015.• Thelatestoccupancyratewasat92.6%,anall-timehighinmanyyears.• TheoverallaveragerentalrateincreasedfromTHB630inQ22014toTHB674persquaremetre, orapproximately7.0%perannum.

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Q1 2015BANGKOK CONDOMINIUM MARKET overview

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• Oversixyearsandaquarteryears,theaccumulatedsupplyofBangkokcondominiums,asofQ12015,was381,772units,increasingby3.7%fromQ42015.

• NewlaunchesofBangkokcondominiumsduringQ12015wasapproximately13,737units.

• Majorityofthenewcondominiumsupplywaslocatedintheperipheralarea,comprisingapproximatelyx.69.1%ofthetotalsupply.NThenewlylaunchedofcondominiumslocatedintheCBDandCityFringeareawasmadeup19%and12%,respectively.

• Thetake-uprateoftheoverallBangkokcondominiummarketdroppedto44.3%inQ12015,from46.9769%duringthelastquarterof2014.

• DuringQ12015,wehaveseentheasignificantincreaseofcondominiumsellingpricesintheCBDarea,increasingby8.2%,fromTHB182,797persquaremetreinthepreviousquartertoTHB197,779persquaremetre,whereasthesellingpriceofthecCityfFringecondominiumsincreasedby5.3%fromTHB142,108persquaremetreinthepreviousquartertoTHB149,676persquaremetre.

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Important Notice© Knight Frank LLP 2015 – this report ispublished for general information only andnot to be relied upon in any way. althoughhigh standards have been used in the preparation of the information, analysis, viewsand projections presented in this report, noresponsibility or liability whatsoever can beaccepted by knight Frank llP for any loss ordamage resultant from any use of, reliance onor reference to the contents of this document.as a general report, this material does notnecessarily represent the view of knight FrankllP in relation to particular properties or projects. reproduction of this report in wholeor in part is not allowed without prior writtenapproval of knight Frank llP to the form and content within which it appears. knightFrank llP is a limited liability partnership registered in england with registered numberoc305934. our registered office is 55 Bakerstreet, london, W1U 8an, where you maylook at a list of members’ names.

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