The supply of new condominiums in Bangkok grew a massive 182 per cent last year compared to 2009, however fears of an oversupply appear to be subsiding as developers moderate the number of new developments they are offering to the market.
In its Bangkok Condominium Market Q4 Report, research company Knight Frank noted that further demand for condominiums in the suburbs will grow after the extension of mass transit lines from the central business district to outlying districts.
Demand in 2010 was predominantly generated by Thai buyers, with transactions most prevalent in the low end sector of the market. Demand for affordable condominium developments was strong, especially the projects along planned mass transit lines.
Knight Frank noted continued prices rises, with a between 2 and 5 per cent quarter-on-quarter increase noted in the fourth quarter. Prices in the peripheral areas of the city were noted as being “quite stable” due to the majority of new supply being added in this area during the second half of 2010.
Activities in Bangkok’s condominium sector dominated the property market last year. Huge supplies in 2010 will slow down the new launch of condominium in 2011, according to predictions from Knight Frank.
New supply of condominiums in the last quarter of 2010 was estimated to be about 28,483 units. Even though interest rates are rising and mortgages are capped at 90 per cent of value, demand is not expected to reduce for condos located close to mass transits systems.
Prices are estimated to rise, due to rising land cost, as well as construction and labour costs. The selling prices of Grade A City Condominium was recorded at THB128,752 (US$4,237) per sqm in the fourth quarter of 2010, up to five per cent up on the previous quarter.
The cumulative supply of condominiums in Bangkok was recorded by Knight Frank at 217,731 units The new supply added during 2010 was approximately 68,745 units.
The report described the Bangkok condominium market as “sizzling” in the second half of 2010, with condominiums located in peripheral areas increasing to attract attending.
Knight Frank said that new condominium supply in 2011 is expected to shift to areas in the city with a proven ability to attract sales. The report noted: “The number of condominium supply may be less than last year, since developers are aware of competitions which will lead to a price war.”
The report added there will be some developments in peripheral areas, and that selling prices are expected to increase due to rising construction costs and increasing inflation rates. This, Knight Frank concluded, will see more smaller, affordable units being purchased by end users as opposed for buy-to-rent or speculation purposes. (Knight Frank Thailand)