2021 was a year dominated by travel restrictions due to the COVID-19 pandemic. The central Bangkok market boom we had previously seen over the last 10 years has experienced a paradigm shift. This has manifested itself in multiple ways, from fewer new launches, changing buying habits and greater sensitivity to market pricing.
Some believe a market cooling was on the way even pre-Covid. Lack of foot traffic from tourists, greater restrictions on bringing money out of China & fast rising prices have all lead to a general slowdown in the market from 2020. In Q4 travel restrictions were finally lifted to enable more convenient entry into the Kingdom, with a re-opening of the tourist market this may stimulate the residential sector into next year.
So far there has been no significant drop in overall pricing, but there has been a much slower market both in terms of developer sales and resales. The secondary market in Bangkok is relatively illiquid, so we haven’t seen a rapid price drop, mostly just a lack of transactions compared to previous recent years.
High-end Market Excels
The high-end market is continuing to show a lot of actively, this buying attitude seems to be reflected in larger global buying trends. The demand for Grade A quality buildings has remained the most consistent, particularly in the form of ‘branded residences’. These high-end projects are considered stable assets and with strong foreign & local demand are often bought as trophy purchases. The services offered to cater to the high-end cliental are of primary interest. Buyers are often focused on a long-term investment in these buildings, often used as a pied-à-terre, it’s common place for international buyers to add Bangkok to their portfolio and a global top-brand is an attractive appeal. Buyers are also interested in these properties as legacy purchases to keep and pass down within the family, especially considering the soft inheritance tax in Thailand.
An example of this in action are the ‘Sky Mansions’ at the Ritz Carlton Private Residences which are larger than the standard units with higher ceilings on the top floors, these have seen more re-sales in 2021 than the last 3 years combined.
The Residence at Mandarin Oriental has been another success story, close now to selling out, the riverside’s on-going development and appeal to the luxury market has proven to show real demand.
Outside of the ‘Hotel-Branded Residences’, the comparable penthouse market has also activity. Typically, the majority of penthouses are sold post-completion and demand has remained strongest in prime locations; Sukhumvit, Sathorn & the Riverside.
There are some interesting additions coming to the city centre soon at the ‘Dusit Central Park’ & ‘One Bangkok’ offered on leasehold along with the recently completed Sindhorn Village. Attitudes towards leasehold in this segment will be something to watch as this is huge disadvantage for some foreign buyer attitudes (despite usually a reflection in price/PSM).
Limited New Launches
There are some opportunities to take advantage of however, developers are shifting focus to selling finished but unsold inventory. 2021 has had the lowest amount of new launches in Bangkok compared to the last 10 years. This is beneficial as well as it gives the market an opportunity to absorb any stock and ease any concerns of over-supply. Promotion units, additional discounts, transfer fee waivers & furniture packages are all tactics we’ve noticed to incentivise perspective buyers.
There have been multiple success stories this year with developers being able to sell out projects, buyer sensitivity is high to pricing, so other those offering genuine discounts to be taken advantage of have benefited from this market. A recent example of this has been SC Asset’s BEATNIQ in Thonglor, having finished in 2018 finally sold out in Q4 2021.
Changing Buying Habits
Since the work from home culture has become a normal part of everyone’s lives, space is becoming an increasingly important factor, even potentially out-weighing previous priorities, such as distance to transport. Our foreign market has seen a mixture of buyers who are comfortable buying site unseen – their profiles are often international, looking to grow their international property portfolio and are confident long-term with the Thai market including locations & developer profiles. We’ve also noticed a lot of actively from expats currently living in the city, they’ve had plenty of opportunity to shop around for deals and many are buying.
There has also been a general shift of buying focus, from off-plan only for exceptional opportunities as the speculative market has cooled to taking advantage of finished projects developers are keen to get off their books.
A growing trend in Bangkok which looks to continue into the foreseeable future will be to offer greater variety on unit types, sizes and particularly Loft-style units. A recent example has been the successful launch of AP Thai’s new Life Rama 4-Asoke which in less than one month has sold out of Thai quota for their ‘Vertiplex’ units.
To learn more about the difference between Loft, Vertiplex and more, please follow our guide: Loft, Duplex, Moff, Vertiplex and more. Guide to multiple level condos
Cooling Rental Prices
Buy-to-let investors in the short-term should be wary of a cooling COVID-lead rental market, everyone is looking for a ‘special’ discount during this unprecedented period. Longer term when a level of normality returns there will inevitably be a bounce back on rental prices. Whilst yields might be dropping in today’s market, the capital prices have seen relatively little movement, which is perhaps unexpected to some.
Investors should focus on where most of the market activity & price consistency has been, which is still centered around central city locations; Sukhumvit, Sathorn/Silom & Riverside. A strong developer profile is becoming more important than ever.
What to Watch in 2022
We expect to see a wave of new launches at entry-level and mid-level of the market, particularly from Thailand’s biggest developers which have been on hold since late 2020. Sukhumvit is still leading the way in demand and development both in infrastructure and in the residential condo sector. One particular location to watch is Sukhumvit Soi 38 located in Thonglor. This Soi is home to multiple plots from Ananda, Raimonland, Grand Unity, V Property & Land and House. It could be down to ‘who jumps first’ when launching before others follow suit.
Another fast-developing area to watch is East Bangkok along Sukhumvit. Bang Na area is quickly turning into its own residential hub following the success of MQDC’s Whizdom 101 project in Punnawiti – with phase 2 under construction now.
MQDC are re-defining the blueprint for residential property in Bangkok. Their ambitious Forestias project is creating a ‘forest town’ from scratch built around community and reintegrating natural ecosystems. This mega-project features multiple buildings; Whizdom Condominiums, Mulberry Grove Villas, Mulberry Grove Condominiums, Six Senses Residences & Aspen Tree Residences.
Bangkok’s continued commitment to a growing Metro network will also see some substantial additions with the new Pink Line & Yellow line beginning operation: https://lazudi.com/th-en/blog/guide-to-bangkoks-new-metro-lines
2022 will be an important year for Bangkok (among all major global cities), assuming there are no extended periods of lockdown, then growth can be just around the corner (although we feel it will be a slow and steady upwards trend over the next 2 years). Developers will need to be smart with their new launches, old ways of: we build, they buy, don’t stand true. Proven CBD locations, greener concepts and smart use of SQM space is in vogue. Resell, secondary markets have remained strong as buyers look to continue renovating and maximise rental yields and capital gains. Attitudes have definitely changed, we’ve seen first hand more buyers investing for personal use (relocating and making Thailand their primary residence). The buy to let investor segment is much more strategic on price and location. The fringe city will struggle for a few more years, but the core CBD has remained active and resilient with plenty of liquidity.
Overall the market has been reshaped, the way people are buying has changed with virtual and remote viewings, why people are buying and the type of property they buy has evolved, consumers are a lot more savvy with developers needing to be more thoughtful. Hopefully the first step towards a more sustainable and stable journey ahead.
