APPD Market Report Article


December 1, 2021


THB 532.6


Limited expatriates bumps up vacancy rate

  • The surge of COVID-19 cases in July-August negatively affected sales activity; in-person visits were restricted so buyers could only inspect or meet digitally. Wealthy domestic real end users and long-term investors were the key potential buyers. As there was no new supply in the quarter, the market unsold rate dropped to 4.6%, translating to around 3,130 unsold units.
  • Luxury rental demand remained low in 3Q21. Both personal and corporate budgets were reduced as a result of the economic downturn. The number of expatriates remained limited during the 3rd wave of the pandemic. As the result, the apartment vacancy rate jumped by 3.2% q-o-q to 13.7%.

Developers halt launch of new supply

  • Construction was shut down in June-July due to the pandemic delaying the completion of a number of projects. With no new completions or new launches in 3Q21, the total stock remained at 68,500 units.
  • There were a few ownership transfers of existing apartment projects. Among them, the Pentacle II was completely closed and the Pentacle I had 70% of its existing units under renovation while KC Court and Lily House continued to operate normally. Apart from these, several apartments entered partial renovation, including Lee House, Baan Sawasdee, and Charoenjai Place.

Yields expected to compress further

  • Many heavily discounted units had been sold off, leaving mostly units at regular prices in the market. As a result, capital values increased by 7 bps q-o-q to THB 126,975 per sqm. However, new take-up was still very limited, approximately one-fifth of the active projects achieved new sales in the quarter.
  • Condominium net effective rents continued to drop by -98 bps q-o-q to THB 472 per sqm per month, especially in locations surrounding business areas. The increase in flexible working and work from home has lead to a compression of leasing demand volume in downtown. Owners have been struggling to find tenants to occupy their buy-to-let units. As a result, yield continued to decline to 4.6%.

Outlook: New opportunity through digitisation

  • Several luxury condominiums in the pipeline will be launched once the country is fully reopen. In addition, the government plans to announce the expansion quota of foreign ownership in condominiums, which aims to attract international buyers to Thailand. Both factors would bring a significant amount of activity to the luxury condominium market through the next 12 months.
  • The expansion of investment in digital assets, endorsed by real physical assets, is expected to increase. Sirihub token, by the residential developer Sansiri, was the first ICO in Thailand. It has already sold out with a value of around THB 2.4 billion. We expect to see more real estate developers offering ICOs, NFTs and other digital assets as a means of crowdfunding.

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

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