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Home / Finance / Real Estate
Bangkok Property Market - Overall Market in 2007 and Outlook in 2008
By:Wantanee Khamkongkaew
The condominium and industrial sectors were the best performers in the Bangkok property market in 2007. Medium priced condominiums continued to attract a new generation of purchasers in locations near mass transit stations. Luxury condominiums in the downtown area performed well with prices of newly launched projects increasing. Industrial properties were the other star performer, with 40% increase in land sales in the first nine months of 2007 and rental factories attaining high occupancy rates in 2007.
The office and retail markets were slow due to weak domestic demand. Bangkok hotels suffered lower-than-average occupancy rates. There was a 22.7% drop in the number of developer-built single-detached houses completed and a 15.7% drop in developer-built townhouses completed in the first six months of 2007.
The prospects for office property will principally rely on the economic prospects after the election and the new government's policies. There is latent demand for houses in good locations shown by high sales rate for new projects launched this year. The completion of the final section of the outer ring road will provide new areas for future residential development. There will also be more housing projects along the Airport Rail Link, which is scheduled to be opened next year or early 2009.
Condominium prices in the downtown area will continue to rise next year. Prices of newly launched condominiums in mid-town locations will increase at a slower rate as end-users tend to choose newly completed condominiums rather than condominiums sold off-plan. The market for serviced apartments in downtown Bangkok will be competitive since there will be a number of new serviced apartments due for completion next year. The luxury hotel market in Bangkok will perform well next year if there are no more security issues in Bangkok. The market for industrial properties looks bright as the government's eco-car policy has already started to spur transaction activities.
The housing market was weak with 7,054 developer-built single-detached houses completed in the first six months and 4,560 developer-built townhouses, representing 22.7% drop and 15.7% drop, respectively. The total new residential supply is expected to drop by about 20% in 2007, compared to that of 2006.
For 2008, the completion of the Outer Ring Road has opened a new area for development that will now have convenient access to the city centre. Consumer confidence will be critical to the performance of the housing market next year.
The overall performance of upscale hotels (luxury and first-class hotels) in Bangkok was weak throughout the year 2007. Hotels in resort destinations, such as Phuket and Koh Samui, outperformed their peers in Bangkok. The average occupancy rate of upscale hotels in Bangkok is expected to be only 70% by the end of year 2007, compared to 75% in 2006. Although the Average Daily Rate (ADR) increased 12.1% y-o-y in dollar terms to US$158 in Q3 2007 and is likely to reach US$170 by the end of this year, the increase was only about 2% in Baht terms.
The forecasts that more than 2,000 new upscale hotel rooms in Bangkok will be completed in 2008, raising the supply by 24% from 2007. Competition will be intense if demand does not recover from this year's level. Resort hotels in tourist destinations will continue to perform well as the number of tourist arrivals continually increases.
Industrial Property Market - 2,611 rai (1,044 acres) of Serviced Industrial Land Plots (SILPs) were sold in the first nine months of 2007, a 40% increase on the same period in 2006. The market for Ready-built Factories (RBFs) has been performing well throughout the year, with 86% occupancy rate. Like the SILP market, Japanese businesses continued to be the major tenants for the RBF market.
The market is expected to be active in 2008. With the total value of the Board of Investment (BOI)-approved projects increased by 99% y-o-y in the first three quarters of 2007. New supply of SILP of about 3,251 rai at the end of this year is expected to be quickly absorbed by the rising demand. The eco-cars are likely to be the next driver of the automotive sector, spurring the industrial property market in 2008. Favourable investment policies of the new government will be crucial to carry on the momentum into next year.
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Article keywords: real estate, Thailand, Phuket, Pattaya, condo, condominium, Bangkok, property, villa, management, office, CBRE
Article Source: http://www.articles2k.com
Wantanee K. is an independent author evaluating and commenting on leading International Property Consultants in Thailand, especially CB Richard Ellis.
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