Will a rise in the minimum salary for college grads help fill up condos?

August 29, 2011 / By  

An interesting, but yet to be implemented, policy from our new government is the introduction of a minimum THB 15,000 baht (USD 500) monthly salary for employees with undergraduate degrees. Whether this is feasible or even plausible (and ignoring other macroeconomic impacts), the prospect does offer hope for developers of or investors in the many residential condos mushrooming across Bangkok.

The trends of widespread mass transit use, evolving lifestyles and demographics, rising incomes and increased access to finance have propelled high-density residential development across central Bangkok. The number of condominium units rising from 49,800 in July 2006 to a total stock of over 172,000 units (including units under construction now). For this type of development to be sustainable, affordability is key. Due to the rising land and construction costs, the abundance of studio and one bedroom units have also gotten considerably smaller over the past five years.

With so much of this type of development, the question has been, who is living in, or will be living in, these small units? One obvious pool is young professionals wishing to save time using mass transit to get to and from work. However, the existing pay scale – where jobs for new grads in the private sector can start at about THB 9,000 baht and for government jobs at about THB 8,000 – limits the affordability. With all degreed employees earning at least THB 15,000 a month, purchasing or renting power could increase considerably. Ignoring the other economic implications, the prospect should give some developers and investors with units becoming ready something to forward to.

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