APPD Market Report Article

Bangkok

May 26, 2024

Anawin Chiamprasert, Head of Research & Consultancy, Thailand

17.4%

THB 691

Rents
Rising

Robust presales and rent rebound ignite the market

  • The market sentiment continued to improve, with the presales rate of recently launched projects achieving over 50%. Overall sales rate has increased by 20 bps. Two projects completed a sell-out in the quarter, resulting in a slight drop in the overall unsold rate to 3.2%. The proportion of international buyers has been expanding, helping to balance the low purchasing power of domestic buyers.
  • Rental demand for apartments showed a recovery, following the increased number of tourist arrivals and expats, up by 12% y-o-y in the first quarter. The completion of recent unit renovations in several projects resulted in an increase in the vacancy rate, reaching 5.0% in 1Q24. However, the rise in the vacancy rate was deemed temporary, given the strong rental demand.

Renovated apartment units return to meet growing rental demand

  • In 1Q24, luxury condominium stock remained at 73,000 units due to a lack of new completions. Recently launched projects include Soonthareeya Ratchadamri and Muniq Phrom Phong, along with two adjacent projects, Scope Thonglor and The Residences 38. Through 2028, the total number of luxury condominiums in the pipeline stands at approximately 6,100 units.
  • The stock of Prime apartments increased to 4,700 units in 1Q24, following the completion of Seven Place along with the renovation of Tipamas Mansion and Baan Phansiri. The quarter saw the completion of several projects that underwent renovation on some of their units. One upcoming project in the pipeline is K.P. Villa, scheduled to open in 2Q24.

Strong growth in both prices and rents

  • Luxury condominium capital values experienced a significant surge of 9.7% y-o-y growth, reaching THB 144,800 per sqm. Thirty existing projects marked price increases, with 12 projects achieving more than 10% q-o-q increases. Overall luxury condominium investment yields fell marginally, by 19 bps q-o-q to 5.0% in 1Q24.
  • Persistent challenging factors, such as inflated selling prices and high household debts and interest rates, have fuelled demand for rentals. This has led to a 17.4% y-o-y rise in luxury condominium gross rents. Similarly, Prime apartment rents also experienced a notable 49.7% y-o-y increase, driven by positive market sentiment, as reflected in the number of tourist arrivals and influx of expats.

Outlook: New wave of supply drives rent growth

  • By end-2024, a total of 2,800 new units from 12 projects are set to be introduced to the market, increasing the total stock to 75,900 units. These new units have an average pre-sales rate of 68%. As the completion of these new projects approaches, the unsold rate is expected to slightly rise to 4.1%.
  • As a result of the new luxury units and the market recovery, rent growth is anticipated to accelerate further. It is anticipated that the capital values will increase to THB 146,000 per sqm due to the arrival of new luxury products by the end of the year. Market yields will likely remain at a rate of 5.1%.

Note: Bangkok Residential refers to Bangkok's high-end and luxury residential market.

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