No property bubble burst is on the horizon for Bangkok’s condominium market, says the vice president of Thanachart Bank.
Praphan Anupongongarch confirmed that he is unable to see clear signs of a potential condominium-market bubble, looming.
“If demand is dropping because consumers are worried about the European crisis, there is little chance of a condominium bubble occurring,” said Praphan.
He offered poor locations of condominium projects as an explanation for some lack of condominium sales.
Lack of affordability for properties in the central Bangkok district area has forced many Thai and expat buyers to the fringes of the city where property prices are considered more affordable. The Ratchada/Rama IX area has particularly witnessed strong demand from property purchasers.
City fringe property prices range from 70,000 and 100,000 per square metre. Market competition and a strong supply of units maintains affordable prices in the suburban market – home to Bangkok’s most affordable properties.
Most recently, the state-owned Secondary Mortgage Corporation signed a memorandum of understanding to buy mortgages worth THB1.85 billion (US$58 million) from Kasikornbank. This legislative agreement aims to provide liquidity to banks and offer opportunities to home-buyers and investors in SMC bonds, said its executive.
Thailand’s improving economy will enable an increasing number of Thai purchases – in all three market segments; the strongest demand from them being in the city fringe and suburban areas.
Increasing wages will add pressure to prices and result in inflation. Inflation will be particularly evident in the construction industry which relies heavily on manual labour. As a result, prices for residential properties are expected to rise.
The rise in prices will be suppressed by external and internal factors, according to Trading News.
Office rental space is also rising in prices per square metre. The average rental rate of grade A Bangkok central business district office space rose by 4.9 per cent in the first quarter, y-o-y.
Wireless Road is home to the highest recorded rents where THB900 (US$28) per square metre, per month is asked for at Park Ventures Ecoplex office building.
Total office supply in Bangkok grew by approximately 32,000 sq m in the first quarter. However, no new grade A offices were added to the central business district locations. Net new take-up of office space in Bangkok was 35.000 sq m in the quarter.
“The office market continues to improve steadily, with an increase in the net take-up and a higher occupancy rate. Provided there is no major external economic shocks or domestic political events, the outlook for the Bangkok office market is positive,” said Mr Nithipat.
As rents are rising in the highest-quality and best-located buildings, it is advised that tenants plan well in advance of lease expiry dates.
By Laura Neve Tacey
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