This article first appeared in City & Country, The Edge Malaysia Weekly on April 11, 2022 - April 17, 2022

Bangkok is city of juxtapositions. The Chao Phraya River, older buildings, canals and age-old temples are surrounded by modern skyscrapers.

The same applies to its property landscape. The city offers a wide range of residential developments, from mid-range terraced homes and bungalows to luxury penthouses. Its condominium segment, in particular, has gained traction in the past decade, especially among foreign buyers.

Despite having taken a hit from the Covid-19 pandemic, Bangkok’s condo market is becoming active again with the loosening of restrictions. According to Knight Frank Thailand deputy managing director and head of Phuket operation Nattha Kahapana, the segment performed well in FY2021.

“The supply for sale in 2021 was 20,015 units. The number of condos for sale in 2021 were [mostly] located in the suburbs of Bangkok, which accounted for 72% of all [condominium] units sold,” says Kahapana via email.

“As for the units, 7,315 were sold, representing a rate of 36%. The sales rate is low because the buyers are a group of residents focusing on purchasing completed projects that are ready to move in.”

He adds that due to the government’s measures on transfer and mortgage fees for homes worth not more than THB3 million (RM380,000), and the easing of the loan to value ratio limit, finished condos have a better sales prospect than new projects.

“In addition, the demand for working from home has increased, causing some residents to turn to buying more low-rise homes … For 2022, we believe that the condo market is likely to gradually recover and become more active. As large operators have plans to launch additional projects, it is expected that about 10,000 units will be launched in the first quarter of [this] year,” he says.

According to Knight Frank Thailand, the Bangkok condo market has a few main drivers.

“A key aspect is economic recovery. We also have measures to reduce the [quarantine] period in the form of [the] Test & Go [programme]. This is to 

allow normal entry-exit and international tourism. We also anticipate [the] good purchasing power of foreigners, especially the Chinese, who used to be the main purchasers in the market,” Kahapana says.

The condo segment in Bangkok attracts predominantly owner-occupiers. “Investors are increasingly turning to suburban condos to attract tenants.”

The segment still faces several challenges. He adds that the main risk factors are the outbreak of the Covid-19 Omicron variant and the price of consumer goods, including the expected rise in the price of construction materials during the economic recovery period.

“The selling price [of the properties] also has a tendency to increase because the cost of development has started to rise, whether it is the price of land or the price of construction materials,” he says.

“The developers of condo projects still aim to target mainly those who live in the suburbs of Bangkok. The development approach will focus on designing to support privacy and health concerns, including having more technology to facilitate life and work from home.”

Kahapana adds that the economy has not fully recovered and there is also political uncertainty in Thailand.

According to Knight Frank Thailand’s Super Prime and Prime Condominium Market Overview 1H2021 report, the super prime and prime condo market was limited as such projects are usually in choice locations. Furthermore, the development of future projects in prime locations is becoming rare and less frequent as land is scarce.

“The cumulative number of super prime condo units sold was 3,438 units from a total supply of 4,080 units, which reflects an 84% sold rate [during the review period of 1H2021]. The number of new super prime condos sold in 1H2021 was 16 units,” says Kahapana.

Meanwhile, the cumulative number of prime condo units sold was 3,928 units from a total supply of 4,696 units, representing a sales rate of about 84%. Six new prime condo units were sold in 1H2021.

“The average asking price of super prime condos in 1H2021 was THB380,050 per sq m, a decrease of 0.6% from end-2020, while for prime condos in 1H2021, it was THB275,100 per sq m, which decreased from the end of 2020 [by] 1.2%.”

“The spread of Covid-19 still requires further control measures. Even though this segment of the condo market was robust in terms of purchasing power, such purchasing power is becoming increasingly sensitive, causing the demand for luxury condos to decline. Developers are willing to offer more discounts to increase sales in this challenging market environment,” he adds.

In terms of supply, the total supply of super prime condos in 1H2021 was 4,080 units from 31 projects. During that period, only one super prime condo project was launched, namely the Scope Promsri, with 146 units.

Most of the super prime units are located in the Sukhumvit area, accounting for 48% of the supply, followed by the Lumpini area and the area around the Chao Phraya River, at 26% and 21% respectively. Only 5% of such units are in Sathorn/Silom.

The prime condo supply as at 1H2021 was 4,696 units from 21 projects.

“During 1H2021, there were no prime condos launched. Most of the prime condos are located in the Sukhumvit area, which accounted for 37% of the supply, followed by Sathorn/Silom and Lumpini, at 29% and 26% respectively. The area along the Chao Phraya River only housed 8% of the prime condos,” says Kahapana.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.