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News Release

Bangkok

Demand for Condos in Bangkok Remains Strong

But sales slow as buyers spend more time on researching alternatives


​​While sales rates in condominium developments in Bangkok vary greatly from location to location, and project to project, the general consensus is that condominium sales across the city have slowed. With a wider choice of supply to pick and choose, buyers spend more time on researching alternatives.

Demand for condominiums in Bangkok has remained very strong. We have continued to receive high volumes of enquiries from prospective purchasers, particularly for condominiums in central business areas. However, sales volumes are much lower than enquiries.

Wider choice, longer decision making process

Many prospective buyers have appeared indecisive even though they are seriously looking to purchase a unit. Bewildered by a considerable amount of condominium supply offered in the market, these buyers appear unsure if the different units they are looking at offer the best value for money, and as a result, take a longer time to make a decision. However, most of them tend to purchase a unit finally. It is just a matter of time.

According to JLL’s Thailand Property Intelligence Centre, Bangkok’s total condominium stock stands at over 406,500 units at present, with 29,200 units being completed in the first half of 2016. 

An additional 135,900 units are coming on stream. Out of the total amount of supply in the pipeline, around 40,000 units are scheduled for completion in the second half of 2016, and will bring the year-end total stock to over 446,000 units, almost doubling the total stock recorded at the end of 2012. 

A price expectation gap persists

Most of the enquiries JLL has received from prospective buyers are for high-end units located in central business areas priced below THB200,000 per square meter whereas units that are available for sale in these areas are asking prices ranging from THB200,000 to over THB300,000 per square meter.

Realising a fast growth in new supply and slower sales, many buyers expect a discount on prices. However, despite softened market conditions, condominium prices have continued to rise, particularly in off-plan projects.

The growth of prices in off-plan projects is driven mainly by rising land costs and prices generally grow further by 10-20% when construction is completed. 

To accelerate sales, some developers offer more incentives such as free fixed and loose furniture, transfer fee waivers, and exemption of property management fees for a certain period of time. There is no sign of developers offering discounts on prices. 

So the gap between buyers' and sellers' expectations persists and contributes to slower sales in the Bangkok condominium market.

More developers target at overseas buyers

JLL has seen increased interest from foreign buyers who are looking for condominiums in Bangkok, particularly from Hong Kong, Singapore and China. Recent purchases by and enquiries from foreign investors concentrated in the upper-end segment where they could be more confident in the quality of design, construction and management, and investment potential.

Despite low investment yields at 3% or lower, foreign buyers appear interested in purchasing condominiums in Bangkok as an investment. 

With similar quality, condominiums in Bangkok are much more affordable than those in many other expensive markets in the region such as Hong Kong, Singapore and China’s major cities including Shanghai and Beijing. In addition, many investors are willing to accept lower yields from rentals as they have a higher expectation for capital gains in the long term. Such an expectation is sensible as most of the high-end units are located in prime locations where land for future development is increasingly scarce. 

Limited available freehold land should provide for stronger price growth in the prime areas given robust demand at the top end of the market for well-located and well-appointed projects.
Realising the presence of demand from foreign investors, more Thai developers have been keen to market their condominium projects overseas. 

Reaching out for overseas buyers could be a sound idea as it would help expand sales opportunities. However, despite keen interest, foreign investors are no less cautious than Thai buyers.  Any property exhibitions overseas may not generate as quick sales as Thai developers would expect unless incentives offered are attractive enough to accelerate buyers’ decision making.