Bangkok Properties: An Outlook

Bangkok, the Capital of Thailand, has an investment opportunity for foreigners, as well as for the local people. The Chit Lom area is in Central Business District, wherein political unrest was witnessed in April and May. In the period of unrest, the business was almost halved. In that period, the percentage of visits of tourists to Bangkok was reduced drastically. As far as CBD (Central Business District) was concerned, the property prices had a negative bias. Fortunately, not much of the transaction took place as the sellers did not want to sell. This would have been the best possible opportunity for those who wanted to buy at cheaper rates than normal.

Bangkok Condos in Ratchaparasong faced difficulty in development due to political factors, which hindered the customers’ decisions and the rise of building cost. The property in the area averages 145,000 THB to 165,000 THB. Property dealers had to shift their offices to new premises and had to offer discounts for these projects.

It is understood that the ratio of supply and demand is temporarily on the higher side of the latter, but it may not last long. In comparison to the other ASEAN countries, the movement of prices in Bangkok does not increase much. In the real estate market of Bangkok, the difference between offer and bid price gap is not much, which denotes that property prices are reasonable.

In Thailand, the foreigners are not allowed to buy the lands, but, they can buy the properties in condominiums. Several of the developers are emphasizing on the purchase of land for investment purposes. Because of the unrest in Thailand, the foreign companies which have made a joint venture with Thai companies are a little concerned. These properties are on the verge of being temporarily stopped or canceled.

One of the builders, TCC Capital Land, decided to hold its plan to launch two new projects worth THB 2.5 billion in the second half of this year due to the earlier political instability in Thailand. TCC Capital Land is a company formed in late 2003 between TCC Land, which was a Thai development company and CapitaLand in Singapore. It was talked about that the company was planning to launch two condominium projects worth THB 1 billion and THB 1.5 billion respectively.
Despite the talks about their foreign investors backing out, TCC Land is reported to push through with the proposal even without funding from their Singapore partner. The TCC Land spokesperson has given the understanding that Singapore based partner has put a hold to its investment until the crisis is subdued. The Thai company has strongly expressed that its opinion that Thai property market is showing improvement and sooner or later, these projects will fetch a good value.
In the early part of 2010, TCC Capital Land achieved revenues of approximately THB 1 billion. It currently has a sales backlog of THB 9 billion, over THB 5 billion of which is expected to be sold by the end of this year, with the rest to be sold next year.
Few of the reports revealed that there is price rise in the Bangkok condominium sector despite the ongoing political instability. Prices for condominiums in Bangkok have not dropped – and in some cases they’ve been rising as demand from local buyers continues to drive the sector. Research from Thailand’s CB Richard Ellis presented the majority of condominium sales during the first quarter of 2010 came from Thai nationals – not only as end users but also as buy-to-rent investors.
As per the report of The Bangkok Condo Market Focus, as the demand is coming from Thai community, the report noted that property developers are almost all focusing on new launches of one bedroom units. There is a shift in demand from studios to one bedroom units.
The number of unsold inventory in the projects that were completed recently, and projects to be completed in 2010, together with resale prior to completion, will slow the launch of new real estate projects for 2- and 3-bedroom units downtown.
In comparison to the main area, there was a significant increase in launching of new projects in peripheral areas, and strong sales were also seen. The resale price of units in upscale locations and above units has shown an increase of 18.4% year on year basis. The new supply was of one bedroom unit and of two bedroom types.
During Q1 2010 the total supply and prices in downtown were as mentioned.
Supply of condominiums Growth YOY basis Growth QOQ basis
Units 67,176 15.8% 3.2%
Price 156,460 per sqm 19.2% 3.0%
It is significant that local buyers have maintained the growth in the prices in the Bangkok Properties.
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