Condo projects boom in Bangkok suburbs

"With mass-transit lines extending further away from the heart of Bangkok, a large number of new developments are popping up in new hot spots along their paths," Simon Derville, deputy vice president for business development at Raimon Land, said yesterday.

"Over the past 12 months, we have seen the completion of 6,135 new condominium units in the new development areas compared to just 3,730 in the prime city centre. This trend looks set to continue in the foreseeable future, with 30,100 out of 44,168 units due to be completed in the new areas," he said.

Despite the flood-inflicted difficulties of late last year, home-buyers remain strongly confident in the future of the real-estate market. Lingering concerns over flood-water management and robust expansion of public transport systems continue to drive interest in condo projects in Bangkok along the mass-transit lines, while Pattaya’s attractive returns generate an extra push for both property supply and demand.

Developers are now more focused on mid-tier projects in the city vicinity or away from the beach over high-end developments in prime areas because land is more affordable.

"This has led to a massive number of units in midtown zones, and we start to see unsold inventories building up with additional inventory from speculative purchasers."

Bangkok continues to offer great value on the international stage, with the average price per square metre rising by just 2.27 per cent to Bt116,681 – making costs here roughly one-third to one-half those in Beijing and Shanghai, and one-sixth to one-eighth those in Singapore and Hong Kong.

Attractive returns drive Pattaya market

Because of project delays and sometimes halts in construction, the Pattaya condo market saw a sharp drop in unit completions, from 7,400 in the second half of 2010 and the first half of 2011 to just 731 in the past 12 months. About 28,000 units are expected to be completed in three years.

For now, the take-up rate in existing supply is still great but this will have to be monitored in the next couple of years. The lower-priced segments under Bt3 million are doing well as demand for second homes grows along with the city’s ever-expanding range of attractions.

While beachfront locations remain as exclusive and desirable for property buyers as always, development activity has shifted towards non-beachfront zones. Of the 14,309 units launched in the second half of last year and the first half of this year across 31 projects, only 2,688 are on beachfront sites, which still command much higher prices than non-beachfront developments.

The take-up rate among new projects is just 51.7 per cent for non-beachfront properties, and 70.3 per cent for beachfront properties.

"Because entry prices in Pattaya are still relatively cheap, Pattaya offers higher rental yields than in Bangkok," Derville said.

"The market here is shaped by the leisure industry, which leads to shorter rental contracts in general and more fluid prices."