Market Overview:
In the post-COVID world of 2023, the Bangkok residential market experienced mixed messages throughout the year, influenced by various economic, social, geopolitical factors, rising interest rates, and housing affordability.
Completed Stock Shifted & New Appetite for Off-Plan Projects:
Developers have adopted a prudent strategy for new launches this year, delaying anticipated releases and opting to retain land in prime locations rather than selling. Noteworthy success stories have emerged from new developments selling out of the Foreign Quota even during the construction phase, particularly in well-established neighborhoods. These projects appear to strike a favorable balance in pricing, averaging starting prices of 5M THB. Examples worth mentioning include Aspire Sukhumvit-Rama 4 and Aspire On Nut Station [AP Thai], along with Nue District Rama 9 [Noble].
The strategy of discounting or offering promotions to completed but unsold inventory to clear stock seems to have paid off across a mixture of market segments. A holistic strategy of offering genuine discounts, furniture packages, or 'free all' transfer fees was enough to attract buyers looking for deals. Some notable examples are: Maru 2 Ekkamai, XT Ekkamai, XT Huikhwang, One9Five, Khun By Yoo, Estelle Phrom Phong, Hyde Sukhumvit 11 & Knightsbridge Prime On Nut.
Rental Demand Bounces Back:
Following the advent of the COVID-19 pandemic, there was a notable recalibration of rental pricing throughout the city. Landlords, responding to the prevailing uncertainties surrounding entry into the country and the dynamic regulatory landscape governing quarantine protocols, opted to proactively adjust rental rates downward. This adjustment, reflective of a strategic response to prevailing market conditions, ranged between 20% and 30%. The impetus behind this measure was the landlords' concerted effort to incentivise tenancy and ensure optimal occupancy of their residential units in the face of the unpredictability stemming from the pandemic-related travel restrictions and the government's frequent, and at times abrupt, modifications to quarantine regulations.
Subsequent to the reopening of the country, there has been a discernible resurgence in rental pricing, driven by a consistent demand surge stemming from an influx of new expatriates and local residents returning to the central precincts of Bangkok. In light of this renewed market activity, individuals considering investment ventures are advised to exercise prudence, especially when confronted with assurances of a 6% yield from developers. This caution is particularly pertinent in the context of experiences observed in pre-2019 scenarios, wherein promises of such returns were notably prevalent, particularly in conjunction with off-plan projects. As historical patterns have demonstrated, a circumspect approach is recommended to mitigate potential risks associated with overambitious projections and to align investment decisions with the current dynamics of the real estate landscape.
Chinese Demand Remains Cool:
Thailand dropped to fifth among destinations for Chinese property buyers, down one spot from last year and the top ranking in 2021. This shift is attributed to extended COVID policies, price increases for flights, and uncertainty in their own property market.
Kashif Ansari, co-founder, and group chief executive of Juwai IQI Group commented:
“This year, Thailand is no longer the number one destination for Chinese buyers, as it was in earlier years,”
“Instead, it is fifth, and the top four destinations are all traditional English-speaking countries with prestigious educational sectors.”
"Thailand expects at least 5 million Chinese visitors this year, down from about 13 million before Covid-19," It is unclear yet if the mainland Chinese market will return in full, as many pre-pandemic signs of slowdown, such as restrictions on releasing funds and a higher entry-level price to the city, are still in play.
Market Challenges:
The surge in borrowing expenses and inflation has negatively impacted consumers' buying power. Local buyers express apprehension regarding housing affordability, given that housing costs have exceeded household incomes. Consequently, numerous buyers are encountering challenges, struggling to locate viable options within their budget, resulting in their withdrawal from the housing market altogether.
Elevated interest rates and hurdles in housing affordability are exerting pressure on Bangkok's Thai market, causing a decline in pre-sales rates and an increase in mortgage rejections, particularly for units priced below THB 5 million.
Confidence has been rocked with some high-profile issues around Environmental Impact Assessment (EIA). The revocation of permits post-construction for high-profile projects, such as Ananda's Ashton Asoke, has introduced an element of skepticism. The ongoing public court case related to this matter is yet to yield a conclusive outcome. More recently, the contentious decision to revoke the EIA for 125 Sathorn, precisely as the piling work commences, portends a protracted legal limbo. This development not only presents a visual nuisance for both Sathorn Road and the residents at The Met but also contributes to an atmosphere of instability within off-plan projects despite EIA approval.
Ultra-Luxury Segment Sets New Highs:
In a noteworthy development within the ultra-luxury real estate sector, Scope Langsuan has recently attained the pinnacle position as Bangkok's most expensive condominium. The fully-furnished penthouse, spanning 429 square meters, achieved a notable transaction value of 429 million baht, equating to a unit price of 1,000,000 THB per square meter. This stands in stark contrast to the 2019 launch prices, which ranged from 38 to 250 million baht, reflecting a considerable appreciation from the initial rate of 490,000 THB per square meter.
The realisation of Scope Langsuan is the result of a collaborative effort between Scope Company Limited and SC Asset Corporation Public Limited, representing a substantial investment in the ultra-luxury segment, estimated at approximately 7-8 billion baht. Situated on the prestigious Langsuan Road, the property previously held the distinction of being Thailand's most expensive freehold in 2018, commanding a value of 3.1 million baht per square wa.
This flagship venture enlisted the expertise of Danish designer Thomas Juul-Hansen, based in New York, renowned for his contributions to high-profile projects in Manhattan's most affluent locales. The condominium offers an extensive array of amenities curated to cater to residents' discerning lifestyles, including a theater, onsen, wine cellar, music studio and managed by the Accord Group.
While the landscape of new projects within the ultra-luxury domain remains relatively sparse, there exists a discernible demand, as evidenced by the sale of 50% off-plan units at Aman Residences, and notable traction observed in the high floors of Dusit Residences (experiencing sellouts) and the low floors of Dusit Parkside, despite both projects being leasehold ownership.
One to Watch – The Embassy Wireless:
The Embassy Wireless, scheduled for completion between 2027 and June 2028, occupies a prime location on the prestigious Wireless Road in Bangkok. Boasting exceptional views that encompass central Bangkok and various embassies, the project is a joint venture between Noble, a prominent developer listed on the Thai stock exchange, and HK Land. The development is strategically timed to coincide with the opening of the new Central Embassy Phase 2.
Prospective buyers have the unique opportunity to customize unit plan layouts, with options available for 1 and 3-bedroom types, including the possibility of combining two-bedroom units. The project offers a glimpse into luxury living with its rooftop facilities that provide breathtaking views of the city and neighboring embassies.
For those looking to secure a prime residence in this upscale development, early bird prices are currently available before the official launch scheduled for the coming year.
For more information & pricing, please contact Lazudi.
By, Alex Blencowe
Senior Property Consultant
