The current high returns on investment for condominiums near
existing mass-transit lines might decrease in a few years as the
market cools and more supply enters the market, says Wason
Khongchantr, managing director of Agency for Real Estate Affairs.
He said the boom in condominiums near mass transit routes during
the past few years would subside as new routes emerged to serve
''At the same prices [as condos], townhouses and single houses
will have stronger demand if mass transit passes those sites. Thai
people's behaviour mostly prefers low-rise units,'' he said.
Mr Wason said many developers could not start construction of new
projects as they needed to wait for Environmental Impact Assessment
approval. New projects also face higher construction costs, pushing
unit prices higher.
According to the company's survey of condominium units completed
in the past few years in five areas near mass transit lines, returns
on investment were largely from capital gains, three times the
rental returns on average.
''Capital gains are already high. This figure [return from
capital gain] will be reduced in some locations where the
speculation rate was quite high,'' he said. The areas surveyed
included Onnuj, Sathon-Silom and Ratchadaphisek.
Meanwhile, returns from rents might slip as the current supply
would face pressure from the many new condominiums being completed
in the future.
Mr Wason said the situation might not include the even-numbered
sois on the south side of Sukhumvit Road between Asok and Ekamai,
though the units in the area had to compete with a lot of serviced
apartments, because of strong demand from expatriates.
Apichart Paphanpuwong, president of the Real Estate Sales and
Marketing Association, said an oversupply was unlikely despite
thousands of new units entering the market by the end of 2008. The
market would be hot for two years but sales rates might slow down.
''Owners of current rental units need to renovate or make over
the units or they may lose their tenants to newly completed units or
those located nearer to mass transit,'' he suggested.
Meanwhile, apartments would continue to have high potential for
''People's purchasing power has been reduced and many will try to
cut costs so there is some demand from those who cannot afford a