Condominiums were the majority of the real estate products launched in Bangkok in 2007; whereas, other forms of real estate and housing particularly detached houses and townhouses constituted a small minority. This is a phenomenon of uneven share of all housing types available in the market. This is why condominium markets in Bangkok are of great interest to study further.
The Surveys
The Analysis of this paper is based on the most comprehensive and continuing field survey of Agency for Real Estate Affairs (AREA) which is a property information, research and valuation centre with largest database from field surveys. The surveys are one of the most reliable sources of information in Bangkok and Thailand at large because AREA itself refrains from from real estate brokerage and self-interest property development to avert a potential conflict of interest.
The surveys of AREA cover the newly launched real estate projects surveyed at each site on weekly basis and reported on monthly basis as well as the updates of sales situation of housing projects at every half a year. The number of newly launched projects per year is around 300 - 400 and the number of projects available in the market is around 1,200 - 1,400.
The Developments
Actually, condominiums first appeared in the market in early 1980’s after the 1979 Condominium Act was enacted. However, at the beginning, they were not so popular and were mainly catered for higher and middle income households. However, since 1990’s, condominiums went down market to lower income groups. According to the survey of AREA in 1994, one of the cheapest condominium units of 24 sq.metres of the saleable area was offered at approximately Baht 200,000 (US$ 8,000 at that time).
In 1994, the cumulative number of condominium units in the market was 125,856; whereas, 69,354 units were sold and 56,502 units were at the end of 1994 and would be part of the supplies in 1995. According to Fig.1, the number of units left in the market increased over time. Since 2000, with large absorption rate, the number of units left dropped substantially. This number was smallest in 2006 and slightly increased in 2007 but was still very low.
The number of units available in 2007 increased substantially from 55,502 in 2006 to 69,257. This was because condominiums became the major type of “hopeful” real estate products which better sale rate. However, the number of units left at the end of 2007 was still very low. A lot of units could be sold out in 2007 as well. This implies that the healthier market situation of condominium units in Bangkok compared to other types of housing.
Launches of Condominiums, 2007
The latest AREA survey disclosed that in 2007, there were 81,364 housing units launched into Bangkok market of which 44,750 units were condominiums. In other words, condominiums constituted some 55% of the total value and total number of housing developments in Bangkok. Other detached houses, duplex houses, and townhouses were small minority. Shophouses and plots of serviced land subdivision were very few in the market.
The largest proportion of condominium units (17,930 units or 40%) was at the price range of Baht 1 - 2 millions per unit or US$ 30,000 - 60,000 in 2007. It could be said that around two-thirds of condominium units were offered at the price no more than Baht 2.0 million per unit or US$ 60,000 in 2007. In other words, condominiums are mostly offered for low-middle and middle income groups. There were also units worth over half a million US$ per unit as well. However, there were expected to be below 200 units.
Considering the sales situation, some 71% of condominium units were already sold (booked with the payment of booking fee and monthly down-payment). On the whole, some 52% of the units launched in 2007 could be sold. This figure was rather high than old projects because of rigorous campaign during the initial launching period. It should be mentioned that detached houses and townhouses could have the total proportion of sold units at 24% and 33% which were a lot lower than condominium units.
Condominium Market as of End 2007
According to the comprehensive market assessment of some 1,400 housing projects in Bangkok, as of End 2007, there were 108,674 housing units still available in the market. These included newly launched units offered in the market in 2007 and those launched prior to 2007. They were considered inventory units which would be offered for sale in 2008. The number of condominium units was only 29,677 or 27% of the total inventory. In turn, the number of detached houses waiting for buyers was 37,531 or 35% of the total.
Considering the sale situation, 81% of the condominium units were already sold. This was the largest proportion compared with other types of housing. Whereas, four-fifths of condominiums were sold, it was only two-thirds in the case of detached houses and townhouses. By all means, condominiums were more popular among buyers of housing units in recent years in Bangkok.
Performance of CBD Condominiums
The following figure shows the locations of 290 condominium projects offered in the market as of End 2007.
Fig.2: 290 Condominium Projects Offered for Sale in Bangkok, 2007
Source: AREA, February 2008
Note: The area in the oval shape is CBD
As appeared in the Map above, the largest proportion of condominium projects were located in the Central Business District (CBD). Actually, they were located along the mass transit systems in the inner city areas of Bangkok. In outer areas, there were fewer number of projects. This is because of the limit(ation)s of commutation. However, in the future, when the mass transit systems are expanded to the suburbs, condominiums can be built elsewhere as well.
In the particular zone of I, it is the CBD consisting of Pahonyothin Road prior to Jatujak to the north, Sukhumvit 71 to the East, Yannawa ad the Chao Phraya River to the South and west. According to the 2007 survey, there were different types of housing offered in the markets including luxury detached houses, townhouses, shophouses and condominiums. However, condominiums were the vast majority.
According to Table 3, of the total 5,711 units offered in the CBD, 5,691 units (almost 100%) were condominiums. The total units of all 113 projects were 31,462; however, there were only 6,834 units left (22%). It was estimated that of the total condominium units left, it would take only 1.2 months to absorb. This was because the rate of sale per month was 5,691 units.
Observations
There appears certain worry by some beneficiaries involved that there might be some oversupplies of condominiums in Bangkok. However, according to the statistics above in terms of the units sold, absorption and the like, this worry is not witnessed. In general, land is scarce and more expensive over time. Low-rise residences could not be built except in the fringe of Bangkok. Condominiums seem to be the major types of housing available in the market. Considering securities and maintenance, condominiums require few efforts than other types of housing.
However, a major worry is the construction of these projects. Some were delayed due to the fact that they were not granted the approval for construction and the environmental impact assessment. This would cause difficulties to both the buyers and the developers. Costs would increase over time and it might be problematic to materialize the projects. Proper consumers’ protection programs should be applied in order to ensure the reasonable market performance.
Note:
Bangkok in this article refers to the Bangkok Metropolitan Region (BMR) which consists of Bangkok and other five vicinity provinces, i.e. Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon and Nakhon Phathom.
Dr.Sopon Pornchokchai has had experience in real estate research and valuation since 1982. He was a consultant to the ESCAP, UN-Habitat, International Labour Organization and other international organizations. His research master pieces include the discovery of 1,020 slums (1985), CAMA (computer-assisterd mass appraisal) modeling (1990), forecast of 300,000 unoccupied housing units (1995 and 1998), study for property information centre (2000), and the roadmap for Vietnamese valuation profession (2006). He can be contacted at sopon@area.co.th
Agency for Real Estate Affairs (www.AREA.th), Thailand's property information, research and valuation centre with largest database from field surveys. AREA specializes in international standard valuation, survey, research and information services while refrains from real estate brokerage and self-interest property development to avert a potential conflict of interest, thereby ensuring the integrity of our valuation and research work. |
