Bangkok Condominium Market Report Q1 2011 by ColliersThailand

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									Q1 2011 | Condominium


Bangkok Condominium
market rePort

                                            Bangkok Condominium Market
                                            exeCuTIve SummARy
                                            new launches in Q1 2011 fell to a more sustainable level following the frenetic previous six months.
                                            Concerns of an overheating property market have been allayed as a result. the condominium
                                            market has begun the process of consolidation.

                                            Within urban Bangkok, the northern and Southern fringes led the way in new launches with
                                            around 15% each for the total of the whole of Bangkok. the Suburban area accounted for around
                                            56% of the total.
                 mARKeT IndICAToRS
                                            around 3,500 units were supplied in Q1 2011, a slight decrease q/q. For the past two years,
                        Q4 2010 - Q1 2011
                                            quarterly additions to new supply have been remarkably stable.

          new Supply
                                            the earthquake in Chiang mai in march 2011 caused many potential buyers to pay attention to the
            lAunCHeS                        resilience of buildings to damage from such events. more may be required to address these
                                            concerns although Bangkok is far from areas prone to serious seismic activity.

                                                 newly lAunCHed CondomInIum unITS duRIng THe yeAR 2010 – Q1 2011 by QuARTeR

                                                                            Source: Colliers international thailand research

                                            new launches for Q1 2011 were down compared with the previous quarter by around 46%. Just
                                            under 10,800 units were launched in Q1 compared to around 20,000 in Q4 2010. at the end of
                                            last year, there were worries that the market was beginning to overheat with the substantial
                                            number of new units being launched. the Bank of thailand sought to cool the market with a
                                            regulation limiting the maximum loan to value (LtV) to 90% for condominiums priced below 10
                                            million baht. this, coupled with small increases in interest rates, has had the effect of cooling the
Bangkok Condominium market rePort | Q1 2011

                                           newly lAunCHed CondomInIum unITS In Q1 2011 by loCATIon

                                                         Source : Colliers international thailand research

in Q1 2011, the Suburban Bangkok area trumped urban Bangkok with the               of each location from the total. the City area was third, with 600 units.
higher number of units launched. many projects in the Suburban Bangkok             the Southern Fringe area number was on the back of one large-scale
area contain over 600 units.                                                       project, the trust ratchada rama 3.

Within urban Bangkok, the northern Fringe and Southern Fringe areas
have shown the highest numbers with approximately 1,600 units or 15%

                                                             AddITIonAl Supply by QuARTeR

                                               Source: department of Land, Colliers international thailand research
                                     remark: the number of units does not include projects from the national Housing authority

approximately 3,500 new condominium units were completed and                       39,500 units are scheduled to be completed in 2011. the number of
registered at the department of Land in Q1 2011 and the total number of            condominium units under construction and scheduled to be completed in
the whole of Bangkok was approximately 300,000 units, and more than                2011 is the highest since the global financial crisis in 1997.

                                                                                         Bangkok Condominium market rePort | Q1 2011

                                               ToTAl HISToRICAl Supply by loCATIon To 1Q 2011

                                               Source: department of Land, Colliers international thailand research

more than 195,000 condominium units, around 65% of the total, are               compared to the City area. the outer City areas are appearing on the
located in the Suburban Bangkok area. Within the urban Bangkok area,            radar screen due to the extension of the BtS across the Chao Phra Ya
the northern Fringe contains the most units due to its proximity to the         river and along Sukhumvit road and this is set to continue.
city centre, mass transit connections and relatively lower land prices

fuTuRe Supply – uRbAn bAngKoK

          CumulATIve fuTuRe Supply SCHeduled To be CompleTed duRIng 2011 – 2013 by loCATIon In uRbAn bAngKoK (AS of Q1

                                                       Source: Colliers international thailand research
                                                  remark: Supply does not included units in Suburban Bangkok

approximately 21,150 units are scheduled to be completed during the             2011, followed by the City area with around 6,200 units. it is expected
rest of 2011. the northern Fringe area continues to be the main player          that the northern Fringe will continue to dominate supply for the early
in urban Bangkok, with nearly 8,500 units scheduled to be completed in          part of the decade in urban Bangkok.

                                                                                                                      COLLIERS INTERNATIONAL | P. 3
Bangkok Condominium market rePort | Q1 2011


                                  AveRAge SAleS pRopoRTIon of newly lAunCHed unITS In Q1 2011 by loCATIon

                                                       Source: Colliers international thailand research

the occupancy rate in the Suburban Bangkok area was the highest,                project from Sansiri. the on nut-Bearing extension line is close to the
followed by the eastern Fringe and outer City - east areas. the positive        date of the official opening in august 2011 and this spurred take-up in the
figures for the eastern Fringe are the result of a popular newly launched       outer City - east area.

lAunCHeS wITH HIgH TAKe up RATeS In Q1 2011

LPn returned to the number one spot in the condominium market in the            project by LPn is Lumpini Condotown nida – Serithai, located on Serithai
first quarter of 2011 with three projects in two locations, although both       road, with a total unit of 593 units and one of the highest take-up rates.
locations are in Suburban Bangkok. LPn launched two projects at the             as a result LPn launched a new project, Lumpini Condotown nida –
same time. Lumpini Ville Lasal – Barring on Sukhumvit 105 road has              Serithai 2 opposite the first project with 750 units. the new project also
1,028 units and showed the highest take-up rate of almost 100%. another         has a high take-up rate.

                                                                                           Bangkok Condominium market rePort | Q1 2011

u – delight 2 @ Bangsue Station by grand u Living Co., Ltd. is located           Station with a total of 645 units in the Suburban Bangkok area and had
on Prachachuen road in the same location of u – delight @ Bangsue                a high take-up rate of more than 80% shortly after the initial launch.

                                  AveRAge SellIng pRICeS of newly lAunCHed pRojeCTS by loCATIon, Q1 2011

                                                          Source : Colliers international thailand research

the average selling price in the City area is the highest at more than tHB       launched in Q1 2011. the average selling price in the northern Fringe
95,000 per sq m, however this is nearly 13% lower than the average               and eastern Fringe areas are similar due to the land price and the similar
selling price in 2010. this was due to less prestigious projects being           mass transit system provided in the area.

                                                                                                                  COLLIERS INTERNATIONAL | P. 5
Bangkok Condominium market rePort | Q1 2011


                            TAKe-up RATe of newly lAunCHed pRojeCTS by pRoxImITy To exISTIng mASS TRAnSIT
                                                                    lIneS, Q1 2011

                                                   Source: Colliers international thailand research

the take-up rate of projects more than 1,000 metres from the BtS /          because although the projects are close to the BtS / mrt lines, the
mrt systems was the highest, at around 50%. Projects less than 200          selling price was often higher than other areas.
metres from the mass transit system had the lowest take-up rate,

                           AveRAge SellIng pRICeS of newly lAunCHed pRojeCTS by pRoxImITy To exISTIng mASS
                                                              TRAnSIT lIneS, Q1 2011

                                                   Source: Colliers international thailand research

the average selling price of projects not more than 200 metres from         take-up rate.
BtS / mrt lines was higher by 55% - 134%, which directly affected

                                                                                             Bangkok Condominium market rePort | Q1 2011


                            HouSIng loAnS foR peRSonAl ConSumpTIon exTended by fInAnCIAl InSTITuTIonS

                                                Source: Bank of thailand and Colliers international thailand research
                      note: excludes negligible amounts of financing from other sources. Percentage change is comparable quarter-on-quarter.

the growth rate of housing loans increased more than 3% in Q3 2009                  housing loans in that period compared to other periods. the amount of
– Q1 2010 because the government’s incentives attracted buyers to                   loans in 4Q 2010 increased more than 2%, due to the new loan-to-value
purchase and transfer by the second quarter of 2010. this boosted                   limits from the Bank of thailand that took effect on January 1, 2011.

                                                                                                                            COLLIERS INTERNATIONAL | P. 7
Bangkok Condominium market rePort | Q1 2011


STRengTHS                                                                      Bangkok is the capital city of thailand and a centre of work and education,
                                                                               so many people from other parts of thailand move to live in Bangkok.
the market is dominated by large, listed developers with a strong
                                                                               First time buyers still remain a potent force in the market especially in
reputation and a focus on the bottom line. this means greater economies
                                                                               the lower end of the market.
of scale, improved financing options and projects that are relevant to
market conditions. However smaller players can still successfully enter
                                                                               demographics also point to a growing number of plus 50-year-old
the market and add a certain innovation and creativity to the mix.
                                                                               buyers who may be seeking to upgrade to better quality units in good
                                                                               locations due to increased spending power and extra capital from
Highly popular condominium and housing exhibitions as well as frequent
coverage on the housing market from the press help to keep the topic in
the front of potential buyers’ minds and help stimulate further demand.
                                                                               in the longer term, the integration of aSean over the decade could lead
                                                                               to more wealthy individuals from those countries purchasing higher end
developers are targeting different income segments and demographics
                                                                               units in Bangkok where they are likely to operate from. this could
with increasingly sophisticated branding which enlivens the buying
                                                                               generate demand in the latter half of the 2010’s. Further interest could
experience. greater efforts have been made in producing quality
                                                                               be seen from personal investors from india and China.
showrooms that provide buyers with a better insight into the products
they are interested in buying.
weAKneSSeS                                                                     the earthquake in myanmar in march 2011 was not far from the northern
                                                                               border of thailand and it affected some high-rise buildings in Bangkok.
Some condominium projects in Bangkok were starting to be sold prior to
                                                                               the day after the disaster, many people were worried about the security
eia (environmental impact assessment) approval, therefore many
                                                                               of high-rise buildings in Bangkok and this directly affected the confidence
projects are forced to change the design and floor plan, reduce the
                                                                               of people interested to buy a condominium unit. although many
number of floors or units in order to comply or even be cancelled
                                                                               developers announced that their own projects were safe, some buyers
altogether, although they may have sold out already. eia approval is one
                                                                               still postponed their decision. although some form of earthquake
of the main concerns for buyers and many developers are now advertising
                                                                               protection has been included in construction permits for the past few
eia approval in their signage and advertising literature.
                                                                               years, no exact criteria has been established and it is unknown to what
                                                                               extent building can withstand a magnitude 5.0 earthquake measurement
oppoRTunITIeS                                                                  of intensity. However, Bangkok is not located on an earthquake prone
the condominium market in Bangkok has room to grow, especially along           area and are currently built to withstand wind force.
the new BtS extension lines that are not too far from the city. eventually
the further the lines are from the city the more likely landed property will   Commodity prices are causing inflation to creep up and along with
be the mainstay of new residential developments due to cheaper land            economic growth, further pressures to raise interest rates could cool the
prices.                                                                        market even more further into the future.

      Bangkok Condominium market rePort | Q1 2011


                      COLLIERS INTERNATIONAL | P. 9
Bangkok Condominium market rePort | Q1 2011


                                          HISToRICAl Supply by yeAR

                                        CumulATIve Supply In bAngKoK

                                                                                   Bangkok Condominium market rePort | Q1 2011

• CITY AREA                                                                 this area covers locations with their own local infrastructure and
                                                                            convenient transportation. However, commuting is required to have
the area covers four adjacent but competing sub-markets: the Sukhumvit
                                                                            access to the central business and entertainment areas.
section comprising Sukhumvit road between Soi 1 and Soi 55 to the
north and Soi 2 and Soi 38 to the south; the Central Lumpini section
including Phloen Chit road, rama i road, Soi Langsuan, Soi Sarasin,         • OUTER CITY AREA
Chitlom road, ratchadamri road, Witthayu road and rachaprasong              the area covers two parts of Bangkok:
road; the Silom / Sathorn section; and the riverside section fronting the
Chao Phraya river along Charoenkrung road and Charoennakorn road,           outer City (east):
where several five-star hotels are located. the City area is convenient
                                                                            this section starts from the extension of the BtS route at on nut Station
for businessmen, expatriates and tourists, because of its proximity to
                                                                            to the Bangkok boundary to the east.
many office buildings, retailing and local attractions.

                                                                            outer City (west):
                                                                            this section starts from the extension of the BtS route at taksin Station
this area covers three parts of Bangkok:
                                                                            to Bang Wa station, which includes the area from krung thonburi road
                                                                            to ratchaphruek road near Petchakasem intersection.
northern fringe:
this section covers the BtS route starting from ratchathewi Station to
mo Chit Station to the north and the mrt route starting from Petchaburi     • SUBURBAN BANGKOK
station to Bangsue station to the north.
                                                                            these are the environs outside the areas already mentioned. expansion
                                                                            of the mass transit system is the main determinant for increasing future
Southern fringe:
                                                                            supply in a particular area. the expansion from on nut to Samut Prakarn
this section covers narathiwad ratchanakarin road, Chan road,               is scheduled to be completed in 2011. the expansion of the BtS will
Sathupradit road, Charoenkrung road and rama iii road along the Chao        benefit directly the surrounding condominiums, as it will considerably
Phraya river.                                                               reduce transportation costs and time. this will encourage the development
                                                                            of new condominiums in this area. Suburban Bangkok represents the
eastern fringe:                                                             biggest area and for the purposes of this report and includes Bangkok
                                                                            city’s old town (koh rattanakosin area and boundary area). this location
this section covers the BtS route starting from thong Lor Station to on
                                                                            has comprehensive town planning controls restricting building height, so
nut Station to the east, rama iV road and Petchaburi road,
                                                                            there are no condominium projects in the area.

                                                                                                           COLLIERS INTERNATIONAL | P. 11
                                                                                      Bangkok Condominium market rePort | Q1 2011

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 manager / office manager                             thailand                                                    thailand
                                                      antony Picon                                                Surachet kongcheep
                                                      associate director | research                               Senior manager | research
                                                      emAIl                             emAIl

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