Some major provinces outside Bangkok have started to attract condominium developers, though market opportunities remain fairly limited.
In northern Thailand, Chiang Mai is the focus as it is the economic, administrative and educational centre of the region. The pace of residential development overall is brisk but condominium development has slowed as the market continues to absorb a large number of units launched in 2014 and 2015. In any case, detached houses and townhouses continue to dominate sales.
Most condominium development in Chiang Mai has taken place in Muang district, which is experiencing some of the growing pains of urbanisation, including traffic. But the problem is minimal compared with Bangkok, where condos are popular because many are located along mass-transit lines, making the commute to and from work easier.
Condominium activity in Chiang Mai has slowed markedly in the last two years. This is because some 3,300 units were launched in 2014 and 2015, an extremely high figure compared with previous years. Many units are still available for sale. As of October this year, there were a total of 7,470 condo units in the province, with an average take-up rate around 72%.
Condominium units priced between 2 million and 3 million baht account for 46% of all units sold in Chiang Mai. The majority of units fetch average selling prices between 60,000 and 70,000 baht per square metre.
A handful of listed developers have undertaken condo projects in Chiang Mai but 74% of all units have been built by local players. Therefore, average selling prices are not high, though around 8% of the units available are priced above 120,000 baht per sq m.
Muang district is the best location given the abundance of employment opportunities and educational facilities, and its status as a regional transport hub. A light-rail transit route is also planned in the future. A total of 4,580 condominium units have been developed in the district.
Most condo buyers in Chiang Mai are Thais, although there has been a noticeable increase in the past two years in interest from foreigners, especially Chinese. However, the decline in Chinese tourist arrivals nationwide since the Phoenix tour boat tragedy in July is having a direct impact on the Chiang Mai tourism business and property market. The industry is hoping to see a pickup during the year-end festive season.
Only a few new condominium projects have been launched in Chiang Mai in the past two years as all developers want to sell completed projects before launching new ones.
While Chiang Mai has seen many new shopping centres open in recent years years, retail growth has little impact on the condominium market. The main driver of future condo demand could be the light-rail project. Prices of land along the three proposed routes could climb, prompting developers to consider high-rise condos for better returns. But for the next two years at least, the market will be fairly quiet.
Surachet Kongcheep is a veteran local property market expert. He can be reached at [email protected]