Uthai Uthaisangsuk, the company’s senior executive vice president, said demand for mid- to low-priced condominiums, lower than 80,000 baht per sq m, was strong with a take-up rate of 100% in the first half of the year.

“All projects in this segment were sold out within the first six months of being launched,” he said yesterday.

“Our five new condominium projects being launched in the rest of the year will tap this segment.”

Sansiri’s research found there was demand for 23,000 condominium units in the first half, for both newly launched and existing ones, up from the same period last year as demand shifted from low-rise to high-rise units.

The developer, which has delivered a total of about 12,000 condominium units to buyers to date, expects condominium demand in the second half will be more than 20,000 units with 50,000 units for the whole year.

Meanwhile, the launches of about 20,000 units have already been scheduled for the second half with another 10,000 additional units expected.

The take-up rate for condominiums last year was more than 30,000 units, about 49% of the total market, followed by townhouses at 30% and single houses at 20%.

Sansiri will market its D Condo brand for the low-end segment priced at about one million baht for a 25-square-metre unit. The projects will be located close to the skytrain extensions in the Taksin and Sukhumvit Road areas.

The developer’s new properties will comprise four projects with units priced from 80,000 to 100,000 baht per sq m and one luxury project with units priced above 100,000 baht.

During the first half, Sansiri launched two new condominium projects priced more than 80,000 baht per sq m with units starting at 4 million baht for 30 sq m. The average price was 6.5 million baht a unit. About 650 units have already been sold at the two projects worth combined 4.5 billion baht.

For the whole year, Sansiri’s average unit price is expected to be about 4 million baht as a larger number of cheaper units will be launched in the second half.

Mr Uthai said there should be a strong recovery in sentiment in the property market in the second half of the year, given the more stable political situation and an improving economy with higher exports and farm prices, bolstered by estimated economic growth of 4.5%.

The company has targeted 7 billion baht in presales of condominiums in the second half, up from 5 billion in the previous six months.

During the first half the developer transferred units totalling 9 billion baht. Of the total transfer value, 5 billion represented single houses and townhouses with condominiums accounting for 4 billion.

The company expects revenue of 16-17 billion baht for the full year.

Sansiri next month plans to launch Wyne Sukhumvit, a new condominium project worth 1.85 billion baht. Located in the Phra Khanong area, it will comprise 460 fully furnished units sized from 30 to 65 square metres with prices starting at 2.9 million baht a unit.

Rajaprasong ongoing problem

REIC Director-General Samma Kitsin revealed that the condominiums situated within the one-kilometer radius of the commercial district of Ratchaprasong had been severely affected by the recent UDD rally since April. Many companies have to relocate their sale offices while others have to offer special discounts and promotion packages to customers in order to sell out the remaining units.

The sale figures in April in the downtown Bangkok district plunged more than 50%. Some projects had absolute zero sales during the period because no one could enter the area.

On the big picture, condos in Ratchaprasong are likely to face difficulty in development due to the political factor that hinders customers’ decision and the rising building cost. The price of the property in the area averages at 145,000 THB per square meter and can go up to 165,000 THB while the average sales stand at 7-9 units per month

Several projects worth more than Bt10 billion each are under construction or on drawing boards in popular locations including Asoke, Phetchaburi, Rajprarop and Makkasan, at the city end of the link.

Property developers began launching residential projects around the Airport Link when its construction began two years ago. Among the early projects were The Complete Rajprarop by Prinsiri, which is worth Bt1 billion and offers 547 units; Ideo Verb Rajprarop by Ananda Development, which offers 447 units and has a market value of Bt1.5 billion; and Chiwathai Rajprarop, which has 329 units and a value of Bt1.3 billion.

The Fragrant Property Group launched a condominium project, The Circle, last year. With a market value of Bt4 billion, 90 per cent of its 901 units have already been sold.

My Resort by Equity Residential, which launched pre-sales in 2008 and will be completed this year, is offering more than 200 units on Phetchaburi Rd and a 400-unit condominium called True Thonglor, developed by Pool Asset.

Asian Property Development introduced its latest luxury condominium, the Address Asoke-Phetchaburi, last year. With a market value of Bt3.3 billion, it offers 574 units at a starting price of Bt5.23 million per unit.

TCC Capital Land, a joint venture between Singaporean-based CapitaLand and TCC Land, which is owned by beverage tycoon Charoen Sirivadhanabhakdi, launched Villa Asoke, with a market value of Bt3 billion, last year.

Alan Lin, CEO of real estate firm Harrison, said the area around the Airport Rail Link was a new focal point for property developers because of the convenient transportation offered by the rail service.

The company is negotiating management deals with developers who own four land plots near the Airport Link, and plans to launch residential projects worth nearly Bt5 billion next year, he said.

“We believe that this location will continue to be popular through 2010. More than five projects are currently being planned that will offer a total of 4,400 units between now and 2011,” he said.

Condominium units in the area have starting prices between Bt75,000 and Bt150,000 a square metre.

Asian Property Development’s managing director Pichet Vipavasuphakorn said his company had launched The Address Asoke-Phetchaburi because the location would become a new destination for homebuyers when the Airport Link was complete and there was easy transportation in the area.

Land prices in the area also remain lower than those in the Sukhumvit, Sathorn and Silom areas. Homebuyers around the Airport Link will be offered new condominium units at lower prices than those in the inner central business district, although the inner CBD will be within easy reach, he said.

TCC Capital Land chief executive Soammaphat Traisorat said that after introducing Villa Asoke to the market earlier this month, a number of customers had shown enough interest to visit the project. As a result, the company believes that when bookings open this weekend, there will be positive feedback from customers.

“We believe that this area will be the new destination for residential development after the Airport Link starts operations,” he said.

Agency for Real Estate Affairs managing director Wasan Kongchan said demand for residences around mass transit systems continued to grow despite the economic downturn, adding that the behaviour of many homebuyers has changed away from single detached houses to condominiums because of last year’s spike in fuel prices.

“We believe this is a good time to buy a residence around the Airport Rail Link, before land and condominium prices in the area begin to rise,” he said.

Wasan said that when the Airport Rail Link began full operations, nearby land and residential prices would rise 10-20 per cent, depending on supply in the market.

Airport Link plans to begin full operations at the end of this year.

SOURCE: The Nation

So what then is the outlook for Thailand’s residential property market? Are we too headed for a boom? Booms are generally concentrated on the commercial centres and Bangkok experienced its last boom just prior to the 1997 financial crisis.

The pre-1997 property boom in Bangkok was clearly linked to the corresponding economic boom at that time. In the years leading up to 1997, the country had been experiencing economic growth rates of more than 7% a year, rising to 14% in some cases. Naturally, many people prospered during this period, with riches being made and plenty of “easy money”. Inevitably, this was a recipe for property market speculation, as many people bought new properties with the intention of making good profits on the rising prices.

However, the bust came and many people lost money. Prices in Bangkok today have still not returned to pre-1997 days. It is most unlikely that we will see another boom in the near future.

Apart from the fact that Thailand’s modest economic growth over the past few years has been well below pre-crisis levels, there are a number of other factors which will inhibit future growth in the Thai residential market.

Most of the countries mentioned by the IMF attract high levels of foreign investment in their property markets. Conversely, in Thailand, foreigners account for less than 5% of investments made in the real estate market, with the majority concentrated in resort areas such as Phuket and Pattaya.

Another factor that inhibits sharp rises in property prices in Bangkok is that most people prefer to buy their residences rather than rent. At around 3%, rental yields for property investors here are very low compared with other cities where yields are closer to 8% to 10%. These low yields in Bangkok are clearly a deterrent to potential property investors.

As a general rule, the residential and commercial property markets rise in parallel; commercial rents in Bangkok are therefore also very low compared with other major cities. Rents for commercial properties in Bangkok costs approximately 1,200 to 1,500 baht per square metre, well below those of other commercial centres across the region. By way of comparison, commercial rentals in CBD districts in Singapore and Shanghai are quadruple this level.

Although all this is perhaps discouraging for property speculators, it is good news for companies based in Thailand as rent is obviously a very important cost of doing business.

Meanwhile, generous tax incentives are being offered to companies that establish regional operating headquarters in Thailand and Thailand’s economy is expected to grow by at least 4% this year despite the disruptions of the past few weeks. GDP rose by 12% in the first quarter, the highest quarterly growth rate in Thailand for more than 15 years.

The rapidly growing regional economy will also ensure steady future growth in Thailand. The IMF expects emerging Asia, which excludes Japan, Australia and New Zealand, to expand 8.5% this year and 8.4% in 2011.

The key challenge now for the Thailand property market is for confidence to be restored. Fortunately, past experience has proven that Thailand is very resilient, with foreign visitors and investors very forgiving, coming back quickly despite various problems.

While Thailand is not likely to experience a property boom in the near future, we can be optimistic that investor confidence and economic fundamentals will continue to improve and that future growth will be sustainable, rather than the boom and busts that occurred in the past.

SOURCE: Bangkok Post

He said the number of condominiums offered in Greater Bangkok each year totalled around 30,000 units. Of the total, 65% are taken up while 35%, both completed and under-construction units, remain unsold.

The 3,000 finished units priced at 3 million baht on average are the company’s target. For 2010, it aims to manage sales of 500 units worth a combined 1.5 billion baht.

The company would provide strategic consultancy to developers who are unable to close sales of completed condominium projects after it sold out the remaining 60 units worth 250 million baht at The Clover Thonglor condominium in Soi Thong Lo.

“We called it the Clover model,” Mr Yongyutt said yesterday. “It’s not just location, location, location that is key to success. There’s more to it than a single dimension.”

The Clover, with a sales value of 2 billion baht, opened sales four years ago but unit transfers and the opening of the building for use were delayed. After the project was completed, the developer Living Land Capital Plc reopened sales because not all units had been sold.

With 60 unsold units, Living Land commissioned Aquarius, which suggested additional spending of 500,000 baht to renovate the project and add a new look including an additional playground, new design in the lobby and the swimming pool.

At the same time, the remaining bare-shell units were fully furnished before sales resumed. As a result, the developer was able to increase unit prices to 90,000 baht per square metre from 70,000 baht – a lower price than other projects in the same area.

Apart from the makeover, there was also a financial package for buyers. All were sold out within a week during the relaunch in early May.

Mr Yongyutt said the company expected to manage four new projects with 500 units worth 1.5 billion baht in the second half of the year. It would also spend 300 million baht to buy new plots of land for development of townhouse and condominium projects.

Currently, it manages property development and sales for the Navatanee housing project on a 70-rai site on Seri Thai Road worth around 4 billion baht. The design, size and pricing, as well as market research, was under study.

During the first five months of the year, it recorded 80 million baht in revenue – 30% from fee-based business and the rest from sales of its Aequa Condominium on Soi Sukhumvit 49 and from the Samui hotel business.

He said the hotel business had slowed in the past two years after Phuket made a comeback. Average occupancy last year was 50% and 70-80% on Chaweng Beach, a famous destination on the island. The company’s Shasa Resort had 30% occupancy in 2009 and expected 45% in 2010. In May, it was 35%, down from 65% in April and most guests were Thai tourists.

SOURCE: Bangkok Post

Bangkok Property Market in the doldrums.

The grim reality of Bangkok’s bloody street battles, which have resulted in scores dying and more than 1,400 injured, has brought both the tourism and residential property markets to a screeching halt.

Knight Frank Chartered managing director Phanom Kanjanathiemthao said that while every segment has been affected by the violence in the heart of the city, tourism is taking the most visible hit.

As any negative impact spreads like lighting, tourism at resorts such as Phuket, Pattaya and Hua Hin has practically disappeared because everybody thinks it is unsafe to travel to Thailand.

“This is because over the past two to three weeks there have been announcements that it might get more violent – not just in Bangkok but across the country, especially in the North and the Northeast,” he said.

Mr Phanom added that many international hotel chains now have an internal policy barring staff from travelling to Thailand regardless of what issue they may have to deal with.

“People operating hotel chains here mentioned this, so if hotel chains won’t let their staff come here there is no need to even talk about tourists.”

Everything seems to have come to a halt in the residential market, with sales either being very low or non-existent in both new and secondary markets.

“People aren’t buying unless it is essential to do so, for example having to move house, but this total is very low,” he said.

“If it is a new product, there isn’t any hurry to buy, so everyone is putting it off. This impact has been felt since the middle of March.”

While some might think this is an opportune time to go bargain-hunting, Mr Phanom said that no one is doing so because it seems everyone is waiting.

“The sellers don’t want to sell cheap, while the buyers don’t know how things will pan out, so bargaining has not occurred.”

Speculators too have all disappeared because they don’t play in this sort of market. Although there are still people looking at developments, again the total number is very low.

It is unfortunate that the residential market has been so hard hit because prior to this, in December, January and February, the outlook was quite good.

“There were positive signs, there were developers mapping out plans to launch new projects, demand was quite good and everybody thought things were positive.

“The situation is worrying because after good economic expansion from the second half of last year to early this year came the protests in March and April that continued into last week. I can see that everything has stopped.”

Mr Phanom said it was not only residential property in Bangkok that has been affected, but also those in resorts such as Hua Hin, Cha-am and Pattaya.

“In the Phuket market, some clients who had looked at some properties have now cancelled. They looked at these homes through our agency, and we were in the process of talking about the details of deals when they said they wanted to wait another three to four months and would return after that.

“They asked us to halt the deal – the seller wants to sell but the buyer is not in a position to take a risk.”

However, the office market is unlikely to be affected in the short term, with occupancy rates likely to remain stationary, and any possible drop being only one or two percentage points.

“There hasn’t been a negative impact on rents from the way the situation has developed, because it had already reached the bottom when the airports were closed in 2008.”

However, the long-term picture depends both on the economy and how the government resolves the current political problems, plus how quickly this is done, because doing so promptly would raise the confidence of investors, especially foreigners, but also Thais themselves, who might want to expand their investment or channel money into new ventures.

“I believe any decision by the business sector will take six months after the protests end.”

Looking ahead to next year, Mr Phanom agreed that if political problems persist then the negative effect would continue, with it being difficult to both sell property and launch new projects. “If the situation deteriorates it would mainly be due to politics and not because of the global economy or global problems. Should the situation worsen, no one would buy.”

Mr Phanom has also not seen companies off-loading their properties mainly because the current flare-up of political violence has only lasted a little over two months, which is a very short period and executives have not reached the point whereby they feel they have to sell.

“But another six to nine months, or one year and you will start seeing more negative signs. In six months’ time they will start looking around, after nine months they will say the situation is not good and in a year’s time they will feel certain it is not good. So the time span leading to forced or cheap sales is nine months to a year.”

SOURCE: Bangkok Post

Thailand Real Estate

Foreign demand for Thai property will likely plummet due to the tragic ending of anti-government rallies in Bangkok last week which cost scores of lives and led to widespread rioting throughout the capital, real estate consultants say.

Patima Jeerapaet, managing director of property consultant Colliers International Thailand, said marketing activities in the property sector would continue even though the political crisis has spread nationwide and is uncontrollable.

Property activities in the second quarter will drop as April and May are traditionally a quiet period. It may take two months for local demand to pick up but foreign demand remains unpredictable.

“If everything is calm soon, it [foreign demand] will pick up in June as local demand remains strong,” he said. “But we cannot depend on foreign demand as the negative factors are not only the political turbulence but also the currency.”

After the 1997 Asian financial crisis, many foreign buyers flocked to Thailand because the baht was very weak. But Western currencies are now low, with the euro under 40 baht and the pound sterling around 46 to 47 baht.

“We cannot say when foreign demand will pick up. There are other factors like the world economy and natural disasters around the world,” said Mr Patima, also chairman of the Joint Foreign Chambers of Commerce in Thailand’s property committee.

However, a few investors are concluding deals. They tend to be local investors who are confident of a peaceful resolution to the political crisis. Some other investors are willing to take high risks for high returns.

Minor foreign investors have deserted the Thai residential market since the start of the red-shirt demonstrations in March, leaving only foreigners living in Thailand who are looking to buy, said Aliwassa Pathnadabutr, managing director of international consulting firm CB Richard Ellis (Thailand).

CBRE said some projects under its sales management in Hua Hin concluded a few transactions for residential units in the past week. Sales offices in Bangkok resumed operation on Sunday, fielding enquiries without making sales.

Ms Aliwassa said the price of condominium units in Thailand will remain stable for a while after recovering from the 2008/09 crisis. However, developers launching new projects in the near future are unlikely to set high prices.

“Buyers will continue to have the upper hand in residential markets. Although developers may not lower prices, they are likely to have strong promotional campaigns to stimulate sales,” she said.

Duangjai Kraus, managing director of the German-based property broker Engel & Volkers, said foreigners, both newcomers and frequent visitors, have lost confidence in the local property market.

In her view, a revival in the tourism sector is needed to boost the residential market. “It will take up to two years before foreigners invest again,” she said.

The company expects its sales in the second quarter to drop more than half with most deals coming from local buyers interested in distressed assets.

Ms Duangjai said now is a good time for intuitive Thai investors to acquire a land bank at a good price.

“Foreign medium- to large-sized investors will delay investment for a year to see the results of our election and the new government,” she said.

The agency is waiting to see how the government’s recovery plan for the tourism sector will support the property market in the fourth quarter and whether a new election could help solve Thailand’s prolonged political crisis.

SOURCE: Bangkok Post

A total of 79,825 properties, including land plots as well as residential units, transferred in the first quarter, a 31% increase from the fourth quarter last year.

Residential units numbered 61,200, up by 35% from the fourth quarter of 2009 and by 59% from the same period last year, said REIC director-general Samma Kitsin.

Condominium units climbed by 106% year-on-year to 26,852 units, while townhouse gained by 33% to 16,767.

Single houses rose by 35% to 10,363, and shophouses by 47% to 5,770. But duplex houses dropped by 26% to 1,448 units.

“The number of transferred properties was a record high as homebuyers, developers and financial institutions hurried their transactions to complete within the earlier expiration date [on March 28],” said Mr Samma.

However, it was announced on March 23 that two of the three incentives _ low transfer and mortgage fees _ would be extended until the end of May.

In March alone, 37,837 housing units were transferred, almost as many as the total for the final quarter of 2009, which was 38,454 units. In March last year only 18,014 units were transferred.

Non-residential units transferred in the first quarter totalled 18,625. Most were land plots, which contributed 17,120 items, a 45% year-on-year increase.

REIC estimates new units outstripped second-hand units by a ratio of 56:44 _ a shift from 49:51 in 2009 _ that could reflect developers speeding up completion of units to gain incentive benefits.

New units topped resale units for condominiums and duplex houses, but most single houses, townhouses and shophouses were second-hand.

The value of transferred properties was around 275.99 billion baht, up by 124% from the same period last year. Residential units were worth 149.16 billion baht, an 89% increase. Non-residential units gained by 187% to 126.83 billion baht.

Condominiums contributed 47% of the value of residential units, up by 179% to 69.64 billion baht. Single houses made up 26%, rising by 50% to 38.99 billion baht. Townhouses provided 15%, gaining by 44% to 22.74 billion. Shophouses contributed 10%, increasing by 45% to 14.73 billion. Duplex houses provided 2%, up by 38% to 3.08 billion.

The total space of condominiums transferred was 1.22 million square metres, a rise of 111%. Bangkok contributed 1.02 million sq m, an increase of 115%. Nonthaburi made up 115,000 sq m, a gain of 69%. Samut Prakan provided 70,000 sq m, up by 176%.

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