Should we stop buying condos in Bangkok?
An oversupply of condos in Bangkok would be a reason to stop buying condos in Bangkok, as the Bangkok Real Estate Market becomes awash with new condos for rent and sale.
So what are the figures and how can we draw this conclusion about the Bangkok condominium market?
Well even as early as February 2008 Bangkok Real Estate Market Analysts where remarking that the supply was becoming too great. With a total residential demand in the Bangkok property market of between 66,000 – 80,000 per year in all types of residential property in Bangkok. Which includes Town-Houses, Detached Houses and various other low-rise developments, that do not include condominiums in Bangkok.
However given this rate of supply there were in fact 80,000 – 90,000 condominium units launched in 2008, which in 2010 will come to completion and be launched on to the market. This of course will be in addition to all the other existing condos in Bangkok that are currently unoccupied.
One does not have to be a Bangkok Real Estate expert to deduce that the figures do not add up, and the increased supply of condos on to the Bangkok market cannot be met by the demand of the residents of Bangkok.
In July 2009 the Thailand Business News released an article stating that in deed not only was the demand cited in 2008 was too low for condos in Bangkok, but that also the general demand for condominiums was in fact on the decrease with more residents of Bangkok seeking alternative forms of property such as Town Houses or Detached Houses. In fact companies like Preuksa and Property Perfect released statements claiming that they would be releasing less condos in Bangkok than they had previously planned.
Of course there are developers who have bucked the trend of launching condominiums in Bangkok, Asian Properties (AP) being one such company. Ironically AP has long been known for building some of the best Townhouse and Detached House developments in Bangkok. One of Thailand’s leading English language newspapers, The Nation, reported in May 2009 that AP had decided to launch 12 new residential projects in 2009 and 7 of them where to be condominium projects.
In the autumn of 2009 AP launched The Address Sukhumvit 28, The Address Sathorn, The Address Phayathai and The Address Asoke. These projects are mainly located to existing BTS stations in Phrom Phong and Surasak and in addition are also located near the new Airport Link stations on Makasan and Ratchaparop which will allow residents easy access to the Suvarnabhumi International Airport. The Address brand is a high-end Bangkok condominium development and attracted a lot of the high-end property market whom were willing to pay over THB 100,000/ sqm for a condominium in central Bangkok.
In fact the most expensive of these Bangkok residential developments was The Address Sukhumvit 28, which was being sold at an average price of THB 150,000/sqm. This condominium development sold 85% of its units in the first pre-sales weekend!
In addition AP has launched 10 ‘Life’ branded condominium developments spread all over the city center. Also located near BTS and MRT stations these properties have offered a slightly lower level of development aiming at the mid-end market. But with an average of 500 units per building split into Studio, 1br and 2br units that makes about 5 000 units hitting the market over the next 2 years from this brand alone. And with the new Address units incorporated into the market, the Bangkok property market can expect see and increase in Bangkok condos from AP to the tune of 7,500 – 8,000 units alone!
So why are people buying these Bangkok condos?
Well many are buying multiple condo units, with investors buying as many as 10 a time in some buildings in Bangkok. But if they are buying them for speculative purposes to ‘flip’ them at the time of transfer then they are playing a very risky game, as we know that the demand is not meeting the supply of units, and this demand is often including the speculators.
The other reason is for the buy-to-let market, but again this indeed is a risky game. The only people in large numbers that rent condos in Bangkok are foreigners or expats. And there are just not that many expats in Bangkok that can afford to pay THB 25,000/month or more for a decent sized and located unit.
So there look like there will be an awful lot of Bangkok condominiums left unoccupied on the market however stylish, well located or attractive they are.
So our advice?
Stop buying new condos in Bangkok!