The luxury condo segment, especially in a city as vibrant and diverse as Bangkok, is constantly shifting. As we enter the latter half of 2023, let’s delve into the state of this market, drawing insights from the latest report by Knight Frank Chartered Limited – Luxury Condominium Market in Bangkok 2023: An Overview – and other key findings.
Supply and Demand Dynamics:
The second quarter of 2023 witnessed a significant upsurge in the number of new luxury condo launches. In hard numbers, there was a 40.1% increase from the prior quarter, resulting in a supply of 11,930 units. Demand, however, couldn’t keep pace, culminating in sales of only 3,324 units, or 27.9% of the total new supply.
Such a discrepancy stems mainly from a resurgence in supply, while purchasing power is still on its path to recovery. Especially in the low-priced condo market segment, there is a notable gap between demand and loan approvals. Although there’s a substantial demand, a high rejection rate of loans persists.
Moreover, as we break down the supply into various grades:
- Grade A (Above THB 150,000 per square metre): 9%
- Grade B (THB 80,000 – 149,999 per square metre): 52%
- Grade C (Below THB 80,000 per square metre): 38%
- Super Prime Segment: 1%
It’s evident that the super prime segment, which pertains to the luxury condo segment, only comprises a small fraction of the supply.
Price Trends:
The average selling price in all zones witnessed a 2.2% hike, primarily driven by escalating construction costs. More specifically:
- Central Business District: ~248,000 baht per square metre (1.72% increase)
- City fringe: ~121,300 baht per square metre (1.85% increase)
- Suburban Bangkok: ~68,000 baht per square metre (3.0% increase)
The Road Ahead:
Anticipations for H2 2023 remain positive yet conservative. The anticipation is that foreign buyers, mainly visiting for tourism purposes, might express more interest in suburban areas along the skytrain lines. Furthermore, with the economic crunch predominantly affecting the medium to low condo market, potential buyers in this segment face an uphill battle.
Concurrently, Bangkok’s real estate landscape is undergoing a shift. With enhanced transportation infrastructure and amenities, areas outside the capital now provide value for money. This has made luxury markets more resilient, with wealthy customers navigating economic downturns more seamlessly. Working from home trends and the quest for more expansive spaces have amplified this shift. Consequently, many high-end buyers who previously preferred central Bangkok condos are now gravitating towards larger properties on the outskirts.
The Condo Ownership Advantage for Foreigners:
A key highlight of Bangkok’s condo market is the condominium licence. This crucial provision allows non-Thai nationals to register the freehold of a condo in their own name. Developers can sell up to 49% of a condo’s floor space to foreign buyers on a freehold basis. It underscores Bangkok’s appeal to foreign investors, offering them an ownership advantage in a growing market.
Closing Thoughts:
Bangkok’s luxury condo market, underlined by its resilience during economic downturns, continues to evolve. As developers and buyers navigate this terrain, it’s evident that the market’s dynamism is far from settling into a predictable rhythm. Amid these shifts, the luxury segment, backed by high earners and foreign investors, remains a beacon of optimism in the city’s real estate tapestry.
