Prices in Bangkok to climb by 10%

Prices in Bangkok to climb by 10%, says Colliers
BANGKOK POST Issued date 12 January 2010

PROPERTY
KANANA KATHARANGSIPORN

Prices of residential projects close to Bangkok's mass transit system and rents for grade-A office and retail properties in the central business district will rise by about 5% to 10% this year, says property consultancy Colliers International Thailand.

Managing director Patima Jeerapaet said prices of luxury and mass residential units will this year increase by 5% and 5% to 15%, respectively. The residential market is expected to be buoyant during the first half of the year.

Factors such as affordability and access to the new mass transit lines will be key drivers of housing demand for the next few years. Prices of new condominium units rose by 5% to 10% since the third quarter last year. But new launches of high-end condominiums have slowed as developers have shifted their focus to the middleto upper-middle income buyers.

Colliers' research estimated that about 70,000 condominium units were sold last year, down by 4% to 5% from 2008.The firm expects the figure to rise to 80,000 units this year, of which 30,000 will be under the BoI Home promotion.

Though foreign buyers have faded from the local property market in recent years, Chinese and Indonesian investors are increasingly shifting their focus to Thailand from the Singaporean market,where prices are soaring, said Mr Patima.

Expatriates living in Vietnam are another potential buyer group. They are likely to buy in Thailand as rampant speculation in Vietnam could soon lead to a crash in prices, he said. "We are offering condominium units in Bangkok downtown priced at around 200,000 baht a square metre to ChineseIndonesian buyers," said Mr Patima.

Domestic politics and the Map Ta Phut issue are key factors in reducing foreign interest in the Thai property market, he said. The current situation at Map Ta Phut continues to cast a shadow over the industrial sector, especially foreign investment in the oil and gas sector. But the last quarter of 2009 saw an increase in inquiries and transactions, he said.

No major new office developments were completed in the second half of last year and demand remained weak during the period. Rental rates were cut by 5% to 10% in the central business district and other areas, according to the firm's research.

Demand is expected to remain lacklustre in the first half of this year, but rents should stay firm with no new significant supply coming online until the fourth quarter. There will be 72,000 square metres available at Sathorn Square, developed by listed developer Golden Land Development, and 6,000 sq m from Sivatel on Sukhumvit Road which is developed by local firm.

Colliers research found that the prices of luxury condominiums dropped by 10% last year, while mid-end condominium prices rose by 5% and grade-A office rents declined by 5% to 10%. Luxury hotels were the worst performing sector last year, where average daily room rates dropped by 30% to 40%, while grade-A serviced apartment rents decreased by 5% to 10%.

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