Condo market to expand as Asean unites

The condominium market will continue rising and reach its peak from 2015 onward as the Asean Economic Community allows more expatriates to work in the services sector in the country, says Issara Boonyoung, president of the Housing Business Association.
The far-reaching liberalisation pact will open up opportunities for regional investors to hold more than a 70% stake in service businesses in Thailand, and will allow more mobility of foreign workers.
“Foreign chambers of commerce in Thailand are pushing for the extension of the residential leasehold period to over 30 years,” Mr Isara said. “This will reverse shrinking foreign demand in properties.”
Condominiums started to play a major role in the first quarter of 2008, as seen by the higher quarterly transfers of units than low-rise registrations.
However, year-end total transferred condominiums in 2008 numbered 31,535 units, still lower than low-rise registrations of 50,520 units.
In 2009, registrations of low-rise units dropped to 43,971, while condominiums rose to 46,486, the first time condos were higher.
For the first four months of this year, 13,520 low-rise units and 17,525 condominiums were transferred.
Mr Issara said several factors supported the growth of condominiums, including smaller family sizes of 2.5 persons per household on average, down from seven a decade ago. Condos are also popular as second homes.
About 40% of transactions in the condominium market are resale units, underscoring their appeal as in investment.
Prices per square metre for units in all price ranges except the super-luxury sector have risen significantly in the past few years. For example, units first offered at 30,000 baht per sq m have risen to 50,000 baht.
Development costs have also risen due to higher prices for land and construction materials, scarcity of land plots and limitations of construction.
Despite rising prices, some condominiums still recorded good sales as developers adjust unit sizes to fit buyers’ pocketbooks. Units as small as 22 sq m have sold out rapidly.
“The maturity of the condominium market will be reflected in unit price maturity: the price that buyers cannot afford,” he said.
In a related development, new data showed 111 residential projects were launched in the first five months of the year with 28,374 units worth 65.02 billion baht, said Agency for Real Estate Affairs (AREA).
The agency found that while there were 45% more units year-on-year, the value dropped 5% due to a lower average price per unit of 35% to 2.291 million baht, down from 3.504 million baht.
Pruksa Real Estate launched 24 projects over the period, 22% of total projects, with 8,630 units (31% of the total) worth 11.834 billion baht (19%).
Based on current figures, AREA forecast the launch of 266 new residential projects this year with 69,233 units worth 156.05 billion baht.
Source : bangkokpost.com