Rising land prices forcing new property prices beyond the reach of many in Bangkok

Few new property developments are being launched in Bangkok as rising land prices mean that new developments are priced at levels that are only affordable for a small percentage of buyers.

As a result there has been significant price rises for the handful of developments that are seen by the Thai market as being the best located best quality projects and elsewhere buyers are seeking larger living areas, according to the latest market report from consultants CBRE.

Both the downtown and midtown markets continue to be dominated by Thai purchasers and CBRE believes that the mid market will continue to be a one bedroom market especially as extensions to the mass transit systems makes more areas accessible presenting some opportunities for condominium development especially along the purple and blue lines.

Most of the new downtown project launches in the city in the first six months of 2012 have been one bedroom developments, but it is becoming increasingly difficult for developers to acquire land at prices which make the units affordable.
‘The more expensive the units become, the smaller the size of the potential market. This is because generally the market is being driven by end users rather than speculators or buy to let investors and about 85% of purchasers of off plan units are Thais,’ the CBRE report explains.
The midtown market appears to be increasingly driven by end user purchasers who are almost all Thais. ‘This means that there is a maximum range of budgets which seem to range from one million baht to around three million baht, depending on size and location. The legal minimum size is 20 metres but few developers have built units below 25 metres and only in cases where keeping the price close to a million baht has been the objective or where there is a direct link to a mass transit station,’ it says.

‘Each location has a finite amount of demand and which areas are the most popular continues to change, in some case there is fresh demand in locations that were popular two to three years ago once the units in projects that were sold at that time have been occupied,’ it adds.

The report also shows that existing condominium supply in downtown and midtown areas reached 328,434 units. There were 1,449 units completed in downtown in this quarter.

Four projects were launched in the second quarter of 2012 in the downtown area. The number of newly launched units decreased from 2,679 units in the previous quarter to 808 units in this quarter. One bedroom and two bedroom units dominate new supply at 91%.

Central Lumpini was the area with the highest average achieved re-sales price level at 163,550 THB per square meter.