Friday, 30 January 2015 / www.Pattayamail.com
Leading property management and services agency CBRE Thailand has announced that its focus for 2015 will continue to be on the luxury market, where it anticipates growth in residential demand for both sales and leasing.
In 2014, CBRE concluded 1,644 residential transactions with a combined value of THB 14.35 billion, including sole agency projects and re-sale transactions in Bangkok, Pattaya, Hua Hin, Phuket and Khao Yai. The company believes the level of sales activity will continue well into 2015 and has secured nine new sole agency projects with a combined value of over THB 23 billion.
CBRE recently released its new forecast report for Thailand’s luxury property segment in 2015.
A limited supply of high-end projects in downtown Bangkok has already seen prices at some projects top 300,000 baht per square meter. (Photo/Kimmam/Wikipedia Commons)
Demand, Supply & Pricing:
Although the luxury market will face intense competition due to new supply this year, a broad improvement in the Thai economy and the country’s political stability will be key supporting factors, combined with an improvement in the global economy, particularly in the US and Europe, says the report.
The majority of luxury residential demand will continue to come from high-net worth Thais. Factors that will continue to drive demand include changing social demographics with smaller household sizes and changing lifestyles where there is demand across all ages to live within the prime downtown areas.
Aliwassa Pathnadabutr, Managing Director of CBRE Thailand.
“We expect growth in tourism and foreign direct investment as well as an improvement in foreign interest in investing in the Thai property market. This will be another key growth driver for the luxury residential market,” says Aliwassa Pathnadabutr, Managing Director of CBRE. “In November 2014, CBRE achieved over THB 400 million in sales of Magnolias Waterfront Residences at ICONSIAM during a two-day exhibition in Hong Kong. This is solid proof that the Thai market is seeing renewed overseas interest,” she added.
The report says that in the past few years there has been limited supply of luxury and super luxury units in Thailand. 2014 saw a very limited number of new launches largely due to the political instability in the first half of the year, but 2015 should see the pent-up supply being launched onto the market.
The current prime Bangkok downtown land prices of over THB 1 million per sq.wah is forcing developers to build in the luxury segment. It is likely that high-rise projects launched in 2015 in prime locations such as Wireless, Ploenchit, Langsuan, and Early Sukhumvit to Thonglor will be priced in the range of THB 200,000 to 300,000 per sq.m. However, it does not mean that every project can achieve this and buyers will need to believe the properties have clear unique features to justify the premium pricing. CBRE expects the price rise to continue throughout 2015, but at a more modest rate.
To purchase at lower prices, buyers will have to consider remaining units in previously launched projects, low-rise developments, older buildings or projects in less prime locations. “It is also likely that re-sale prices of units in older buildings with good management in prime locations will increase substantially,” says Ms. Pathnadabutr.
In late 2014, a number of projects, including The Sukhothai Residences, Marque Sukhumvit 39, and Magnolias Waterfront Residences at ICONSIAM, exceeded record breaking prices in excess of THB 300,000 per sq.m., triple the highest prices achieved over 12 years ago.
“This is an opportunity as well as a challenge. Developers need to understand that the location must correspond with the right target market and their requirements. Not every location is suited for a luxury product,” added Ms. Pathnadabutr.
With positive external influences such as the global economic recovery combined with a stable local political climate, CBRE is gearing up for an active 2015.
“We expect to see a highly competitive residential market this year with many, new luxury launches coming on to the Bangkok market. Each project will need to compete on its own merits and there will no doubt be many a challenge on the path to success but projects with the right fundamentals can outperform in this competitive market,” concluded the CBRE chief.
This article was published in the Pattaya Mail newspaper on Friday January 30, 2015 (Vol. XXIII No. 5). - See more at: http://www.pattayamail.com/property/a-bright-forecast-for-thailand-s-luxury-real-estate-sector-44630#sthash.D2yXZLYt.dpuf