APPD Market Report Article
BangkokAugust 26, 2022
Jeremy O'Sullivan, Head of Research, Thailand
Foreign renting returns faster than buying
- Foreign demand for luxury condominiums remained low. Developers have granted foreign quota units to Thais, the crucial market driver in recent times. However, domestic demand decreased as a result of the prolonged economic downturn. Currently, there are 3,102 unsold units in Bangkok’s market, which translates to a 4.5% unsold rate.
- The return of expatriates to Thailand is particularly apparent in the rental apartment market. After the reopening of the country and the relaxation of COVID-19 restrictions, many global corporations have sent multinational staff including Americans, Australians, Europeans, and Asians to fill vacant posts.
New supply scarce in prime market
- Since last year, there has been a shortage of new luxury condominiums in Bangkok. In 2Q22, Anil Sathorn 12 was the only new completion with 222 WELLS-certified units. In addition, Bangkok did not have any new launches of luxury apartments or condominiums during the quarter.
- Developers have transformed their inventory to branded residences for differentiation in the market. In addition, a number of units were converted to serviced apartments, keeping the condominium stock at 69,529 units. Following the reopening of Garden View, the apartment stock increased to 4,699.
Rental market significantly rebounds after reopening
- After two years of market difficulty, the rents of buy-to-let condominiums and single-owner apartments rebounded by 3.3% and 1.0%, respectively. However, the economic slowdown may limit rental growth if it slows down the return of expatriate workers.
- Better market sentiment led to a 1.1% quarterly increase in capital value to THB 131,596 per sqm. Some projects in the pipeline basket increased their selling price as a result of the pandemic’s extremely restricted rates. Existing inventories attempt to eliminate steep discounts and return to normal pricing.
Outlook: Positive signs in condominium market
- In Bangkok’s central business area, a total of 4,012 units are expected to be completed within the next 12 months. Aside from these, a more active market is ancitipated in terms of new project launches and investor demand.
- Rising land and construction costs may accelerate the increase of market capital value. The value may climb to around THB 134,000 per sqm by mid-2023 as a result of new completions in luxury market and higher selling prices of existing inventory.