Chanin: Avoiding stiff condo competition
Demand for low-rise condos in the Sukhumvit area remains strong from real purchasers, foreigners and investors buying for rent as prices are more attractive than units in high-rise projects, say developers.
Chanin Vanijwongse, chief executive of residential developer Habitat Group, said sales prices of newly launched units at low-rise condos are lower than those at high-rise projects because of lower land costs.
"High-rise condo developments require large plots, which means higher land costs," he said. "Plots for high-rise buildings in the Sukhumvit area are usually on main roads, as they are wider than alleys."
Mr Chanin said plots on the main road from Nana to Thong Lor skytrain stations are priced at least 2 million baht per square wah.
As a result, the price of newly launched condos on these plots will start from 250,000 up to 350,000 baht per sq metre.
Plots on sois are cheaper, making sales prices of new condo supply lower. The construction cost of low-rise buildings is also lower than high-rise.
Habitat's market research found the average price of a condo near the Asok skytrain station is 271,000 baht per sq m. Prices near Phrom Phong station are 270,000 baht per sq m and 244,000 baht per sq m near Nana station.
Those prices were collected from 17 condo projects launched in the locations over the past four years, of which 15 were high-rise buildings.
"We remain focused on low-rise developments to launch units priced lower than high-rise projects. It will help us avoid stiff competition in the market," he said.
As 80% of new condo supply launched this year on Sukhumvit sois 31 and 39 will be in high-rise buildings, Habitat plans to launch two low-rise condo projects under the Walden brand, worth a combined 1.75 billion baht, in the third and fourth quarters.
One of them will be located on a 322-sq-w plot on Sukhumvit Soi 39, worth 950 million baht. It will be an eight-storey tower with 116 units sized from 34.55 sq m and priced lower than 200,000 baht per sq m.
The other will be on Sukhumvit Soi 31, with around 100 units worth 800 million baht, scheduled to launch by the end of the year. Habitat expects to have 1.5 billion baht in presales from both sites.
Targeted buyers will be those with real demand, investors buying for rent and foreigners from China, Hong Kong and Singapore, said Mr Chanin.
The company expects 49% will be bought by foreigners, with 80% of them from China and Hong Kong.
He said investment buyers prefer buying condos on Sukhumvit Soi 39 for rent as Japanese expats are key tenants. Rental rates are around 1,000 baht per sq m per month.
Poomipak Julmanichoti, executive vice-president for project development and international business development at SET-listed developer Sansiri Plc, said condos in the On Nut area are attractive for investment as the rental yield is 9.5% per year.
Sansiri will launch The Base Sukhumvit 50, a joint venture with Tokyu Corporation, a major private Japanese railway firm.
The eight-storey condo with 415 units worth 1.6 billion baht will be located on Sukhumvit Soi 50, near On Nut skytrain station.
"We suggest buyers prepare around 20% of unit prices and have pre-approval from banks to prevent being rejected for mortgages," he said.