High-rise buildings rim the Chao Phraya River. Analysts expect Bangkok's condominium market to continue to grow for the rest of the year. (Photo by Thanarak Khunton)

The Bangkok condominium market continued to grow in the second quarter, brushing aside concerns of spillover effects from the Thai economic downturn and rising household debt.

Supply from peripheral Bangkok areas dominated the market as their new launches constituted 73% of total supply, with scarcity and cost of land the main obstacles for developers, according to Risinee Sarikaputra, director of research and consultancy at Knight Frank Chartered (Thailand).

Demand from affluent buyers remained strong as high-end condos with an average selling price of 150,000 baht a square metre from reputable developers in prime locations sold out in short order.

The segment with the slowest growth was mid-market condos located farther away from public transport.

Prices overall were still on the rise, especially for properties in the super-luxury market.

Bangkok condo supply at the end of the second quarter included 362,697 units, marking a 4.2% rise from the previous quarter and 23.9% increase from the year-earlier period.

So far in 2015, 34,439 units from 71 condo projects have been added to supply, of which 20,780 were from 37 projects launched in the second quarter alone.

Most launches were still in the peripheral Bangkok area, representing 73% of the second quarter’s new supply, followed by the city fringe area (21%) and the city area (6%).

Just 1,242 units were launched in the city area, due to scarcity and cost of land. Most new projects in the city are thus Grade A projects or better to justify prices, which factor in land costs.

Ms Risinee said a similar trend could be observed in the city fringe area, where new developments with access to mass transit systems have started to shift to the upper-end market to justify higher land costs.

Out of the seven projects launched in the city fringe, five were Grade A condo projects. In terms of units, 77% of the units in the area were Grade A.

Larger-scale condo projects were mostly developed in peripheral Bangkok, some in areas nearer to future transit stations such as Aspire Erawan, with 1,576 units, sitting 50 metres away from the Erawan Museum station due to open in 2020; and Lumpini Mix Theparak-Srinakarin with 2,041 units near the future Yellow Line.

Overall, the second-quarter take-up rate rose from the end of 2014, from 84% to 85.3%. By mid-year, 309,388 condo units out of 362,697 units were sold.

There were 53,309 units for sale, of which 38,163 were in peripheral Bangkok, whereas available units in the city fringe numbered 9,978 and those in the city area tallied 5,168.

Prices at newly launched condo projects continued to climb throughout Bangkok, but at different paces depending on location.

In the central business district (CBD), prices went up at a much faster rate because of land scarcity and an influx of super-luxury projects opening at prices above 250,000 baht a square metre. The latter included the Four Seasons Private Residence, Nimit Langsuan, Tela Thonglor and Q Sukhumvit.

The average selling price in the CBD was 212,588 baht a square metre in the second quarter, up 18.5% from a year earlier.

Similarly, the city fringe area saw a bigger increase in prices over the last
few periods. The average selling price
in this area was 127,578 baht a square metre in the second quarter, up 15.6% year-over-year.

Land costs near major roads and along mass transit routes were the main factor in rising prices. This was more pronounced on Ratchadaphisek Road, the home of the new Stock Exchange of Thailand complex and many big commercial developments, including the Central Rama IX shopping mall and Thailand’s soon-to-be-tallest skyscraper, the Super Tower.

Sluggish condo demand continues to be confined to specific areas. Condo markets within the city and on the city fringe have the potential for even further growth.

The area of concern is peripheral
Bangkok, where many recently launched projects are overpriced in relation to comparable units in the city fringe area, where access to transport and the CBD is more convenient.