APPD Market Report Article

Bangkok

February 28, 2022

-1.4%

THB 539

Rents
Falling

Foreign investors make a slight return to the market

  • Demand for luxury condominiums remained extremely weak. Most buyers continued to postpone purchases until 2022 or until the return of a positive market sentiment . As only a small number of foreign investors resumed their participation in the market, the unsold rate increased to 5.3%, amounting to 3,527 unsold units.
  • Foreign arrivals saw an increase thanks to quarantine-free travel being permitted for vaccinated persons, which lead to a slight increase in the number of expatriates. However, older structure apartments, that couldn’t achieve adequate performance, were closed and/or renovated. As a result, the apartment vacancy rate decreased by -24 bps, or down to 13.4%.

Delayed new launches are ready for grand opening in 2022

  • After being delayed from the second quarter, Dusit Residences and Dusit Parkside were the only two launches with 406 units in 4Q21. Developers have limited new investments over the past two years and are still waiting for the new wave of Omicron to improve.
  • A total of 2,612 newly completed units rose Bangkok’s condominium stock to 68,988 units at the end of 2021. While luxury apartment stock had fallen to 4,584 units following the withdrawal of Garden View.

Capital value expected to soar

  • In light of the improving pandemic situation in early 4Q21, many developers dared to speculate on higher selling prices for the remaining units. The capital value increased by 26 bps q-o-q, reaching THB 127,210 per sqm. Nevertheless, several projects continued to get the same level of promotion towards the end of the year.
  • Condominium net effective rents climbed marginally by 16 bps, up to THB 479 per sqm per month, due to the re-entering of foreign demand. For a while, workplace flexibility policies harmed the rental market in the city centre. We expected that rental rates will not rise much in the short-term.

Outlook: Better investment and opportunities for owner-occupiers

  • Heading into 2022, we expect to see more speculative activity in the luxury market. The selling price will increase higher as the developers will look to maximise the quality of living and services. Developers will want to promptly establish new launches once the overall economy has experienced a significant improvement.
  • By the end of 2022, nearly 5,000 additional condo units are slated for completion in the next 12 months. While their pre-sales of these future projects were reportedly about 60% on average, that will translate into a higher unsold rate in the near term. Some ongoing initiatives may lose their appeal when newer projects emerge.

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

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