Condos in Bangkok’s fringe areas highlighted for price-rise potential

The company’s managing director, Phanom Kanjanathiemthao, said that in 2017 the condominium projects that slowed their sales efforts at the end of 2016 would gradually launch projects in the first half of this year. 
Phanom said projects in fringe areas of Bangkok had high sales prospects and prices may be on an upward trend.
The outer Sukhumvit Road condo supply (from Sukhumvit 71 to Bangna) in the past three years increased by between 4,000 and 5,000 units on average each year. In 2016, there was an increase in supply of 4,832 units, Knight Frank said. 
The new supply in the past three years has fewer units as most of the newly launched development projects encompassed buildings with smaller unit-to-building ratios. On average, projects launched from 2012 to 2013 each contained 465 units while from 2014 to 2016 the average number was 302 units. 
From 2016 data fringe areas had a new supply of 4,832 units, 64 per cent of which are from high-rise projects while 36 per cent of this new supply is from low-rise projects.
When looking at the grade of the condominiums, it was found that most condos in these areas (41 per cent of the total supply) are in the grade B category, followed by condominiums in the grade C category (37 per cent of the total supply). 
The remaining 22 per cent of the supply are grade-A condominiums. This category saw a larger increase in supply than in 2015, where the grade A condo supply only comprised 15 per cent of the total supply in the area. 
Knight Frank said this increase reflected that fringe areas had potential to grow in terms of sales pricing. Since the end of 2015, it is worth watching the growth in grade-A condominiums in the fringe of Sukhumvit. 
In 2016, the accumulated demand for condominiums in outer Sukhumvit areas was 33,133 units, with a total accumulated supply of 40,823 units. This represented an accumulated sales rate of 81.2 per cent, which marks a slight decrease from the same figure in 2015. 
When looking at the year-on-year demand, it was found that there were 3,771 units sold in 2016. Knight Frank said this figure reflected a decline in sales from the previous four to five years. 
This can be mainly attributed to the slowing down in developers’ marketing efforts towards the end of the year, which negatively affected condominium sales in 2016. At any rate, the new supply in each year has not exceeded the demand by much. Along with the high rate of cumulative sales, this demonstrates the high potential of the outer Sukhumvit areas.
The price level of condominiums in outer Sukhumvit (Soi 71 to Bangna) has a compound annual growth rate (CAGR) of around 9.78 per cent per year. In 2016, condominiums in outer Sukhumvit reached the peak price of Bt163,673 per square metre, while the lowest price was Bt74,150.
The average selling price in the areas was Bt101,493 per sq m. |When comparing the increase |in prices, it was found that the |prices have risen significantly. Condominiums priced at Bt85,000 per sq m are considered to be of good value, when compared to the rest of the market. 
There is also room for such prices to rise in accordance with average price rises in the overall area, Knight Frank said.