Taking our information from a report published by Jones Lang LaSalle, in the Bangkok residential market there was an increase in completions of new condominium projects, with robust demand for newly launched projects in 2013. Rents rose slightly but with a decreasing vacancy rate. Capital values edged up by 0.2 per cent quarter-on-quarter while yields remain healthy at 4.9%.
In the final quarter of 2013 there were eight major launches of new condominium projects, totalling over 4,000 units, with the most prominent located near the Surasak BTS station on Sathorn Road, The Diplomat Sathorn and Noble Revo. Both projects witnessed high-volume sales, with The Diplomat Sathorn selling of 92 per cent, while the Noble Revo was sold out by end of last year.
In total, the eight projects realised a combined sales rate of 86 per cent, a huge increase over the 50 per cent sales rate achieved by projects launching in the third quarter of last year, indicating strong demand despite the Thai economy’s weakness and the impending political pressures facing the country.
Also, in the fourth quarter of 2013 a 268-unit luxury project, 185 Rajadamri, and a 35-unit luxury project, La Citta Penthouse, were completed, together with another two high-end projects, The Parco and Rhythm Sukhumvit 44/1, which added a further 937 units to the total stock numbers of 27,593 units. Another new 36-unit apartment project called Siesta @ 43 was launched and, as a direct result of market dynamics, the total apartment stock was 5,403 units.
Average gross rents for condominium units increased slightly to Bt509 per square metre per month, as demand for high-tier condominium units remained relatively healthy, buoyed by a steady influx of expats. Apartment unit rents rose similarly to Bt348 per square metre per month and capital values increased by to Bt110,145 per square metre, while market yields stuck in the 4.9 per cent range.
The report’s 12-month outlook expected 3,800 new condominium units to be completed by end-2014 and that the vast majority had already been sold. It also pointed out that as the market is nearing saturation, it was expected that average condominium unit selling prices and rents would be moderate throughout the year.
Given the country’s weak economic situation at the moment, with its continuing labour shortages, rising raw land prices and on-going political scuffles with only a caretaker government in place, it is increasingly likely that developers may decide to postpone new project launches until these conditions begin to stabilise.
However, sales rates for new projects that do manage to launch in 2014 will be largely influenced by the proximity to mass transit stations, with the luxury market experiencing relatively stronger performance relative to the high-end market.