CB Richard Ellis Reviews The Bangkok Property Market

Bangkok (PRWeb) December 27, 2007 -- The condominium and industrial sectors were the best performers in the Bangkok property market in 2007, according to the leading international property consultants CB Richard Ellis.

Medium priced condominiums continued to attract a new generation of purchasers in locations near mass transit stations. Luxury condominiums in the downtown area performed well with prices of newly launched projects increasing. Industrial properties were the other star performer, with 40% increase in land sales in the first nine months of 2007 and rental factories attaining high occupancy rates in 2007.

The office and retail markets were slow due to weak domestic demand. Bangkok hotels suffered lower-than-average occupancy rates. There was a 22.7% drop in the number of developer-built single-detached houses completed and a 15.7% drop in developer-built townhouses completed in the first six months of 2007.

According to Ms. Aliwassa Pathnadabutr, Managing Director of CB Richard Ellis Thailand, in 2008, the prospects for office property will principally rely on the economic prospects after the election and the new government's policies. There is latent demand for houses in good locations shown by high sales rate for new projects launched this year. The completion of the final section of the outer ring road will provide new areas for future residential development. There will also be more housing projects along the Airport Rail Link, which is scheduled to be opened next year or early 2009.

"Condominium prices in the downtown area will continue to rise next year. Prices of newly launched condominiums in mid-town locations will increase at a slower rate as end-users tend to choose newly completed condominiums rather than condominiums sold off-plan. The market for serviced apartments in downtown Bangkok will be competitive since there will be a number of new serviced apartments due for completion next year. The luxury hotel market in Bangkok will perform well next year if there are no more security issues in Bangkok. The market for industrial properties looks bright as the government's eco-car policy has already started to spur transaction activities," added Ms. Aliwassa.

Condominium Market

The overall performance of condominium market sector was outstanding given the unfavourable economy throughout the year. Completed downtown supply will be about 52,600 units at the end of the year. Occupancy rates of existing condominiums in the downtown area have been increasing steadily throughout the year to about 87% at present.

The average price of grade A condominiums rose from 110,000 baht per square metre in the first quarter to about 123,000 baht per square metre, and is expected to be over 126,000 baht per square metre by the end of 2007, rising by about 12% from the beginning of the year.

The emerging "Skytrain" generation and the changing lifestyle of city dwellers have been key drivers for the mid-range condominium market in secondary locations. The mid-range condominium market, mostly priced between 65,000 and 80,000 baht per square metre, has been active throughout the year. 1,656 mid-range units will have been completed in downtown Bangkok in 2007, representing a 13.4% increase y-o-y.

There will be approximately 8,700 new units due to be completed in 2008 as opposed to about 6,300 completed units this year. "CB Richard Ellis remains confident about the downtown luxury condominium market. We are still seeing strong demand from both Thai and foreign buyers," said Ms. Aliwassa.

Industrial Property Market

2,611 rai (1,044 acres) of Serviced Industrial Land Plots (SILPs) were sold in the first nine months of 2007, a 40% increase on the same period in 2006. The market for Ready-built Factories (RBFs) has been performing well throughout the year, with 86% occupancy rate.

The market is expected to be active in 2008. With the total value of the Board of Investment (BOI)-approved projects increased by 99% y-o-y in the first three quarters of 2007, CB Richard Ellis is looking forward to more transactions in 2008. New supply of SILP of about 3,251 rai at the end of this year is expected to be quickly absorbed by the rising demand. The eco-cars are likely to be the next driver of the automotive sector, spurring the industrial property market in 2008. Favourable investment policies of the new government will be crucial to carry on the momentum into next year.

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