Luxury condo sales and rental demand surge

• Luxury condominium sales in Bangkok surged in 4Q23, with over 800 units sold and notable sales in the Sukhumvit area. Eight projects completely sold out in 4Q23. Year-round volume for 2023 reached approximately 1,800 units. The unsold rate for existing projects dropped to 3.4%, returning to pre-pandemic levels. The proportion of foreign buyers has increased, but remained low across the market.
• Rental demand for apartments skyrocketed due to rising interest rates and the return of international tourism and foreign expats. The vacancy rate for Prime apartments fell for the fourth consecutive quarter, reaching a record low of 3.4%, with nearly half of the stock fully occupied.

Prime apartments pursue major renovations to stay competitive

• In 4Q23, the completion of Tait 12 added to the Luxury condominium stock in Bangkok’s CBA, bringing the total to 73,000 units. Additionally, the future supply pipeline is estimated to reach approximately 5,400 units by 2028.
• The stock of Prime apartments decreased by 105 units to 4,600 units in 4Q23. Several projects that went through renovation will re-enter the market in early 2024, while five additional projects have undergone significant renovation due to ageing over 25 years.

Rising prices drive rental demand and strong investment yields

• Luxury condominium capital values experienced a robust 4.3% y-o-y increase, with price increases observed in 25 existing projects. Eleven projects achieved over 10% q-o-q markups. Overall investment yield improved by 40 bps q-o-q to 5.2%.
• The market witnessed a shift towards rental options as residents responded to escalating selling prices. This drove gross rents up by 16.7% y-o-y for Luxury condominiums and 14.0% y-o-y for Prime apartments in 4Q23. The increase was fuelled by the return of expatriates and strong local demand.

Outlook: Rental demand fuels market activity

• As rental demand picks up, the market is anticipated to be more active over the next 12 months. In 2024, more than 2,700 new units from ten Luxury condominium projects will increase the total stock to 75,800 units, with average pre-sales rates of 56%. Unsold rates are expected to reach 4.6%, following the wave of supply.
• Rent growth is projected to accelerate, while new luxury projects should drive capital values to THB 140,000 per sqm by end-2024. Market yields are expected to remain stable at 5.2%.