Central Bangkok Condo Prices Holding

[george]

Central Bangkok condo prices holding

BANGKOK PRICES HOLD FIRM

BANGKOK: -- The price plunges elsewhere are unlikely to be repeated in the central Bangkok condo market.

The astounding property price decreases in the US, UK, Singapore and Hong Kong are unlikely to be repeated in the Bangkok condominium market because the jumps here have been more rational over the past decade, says James Pitchon, executive director of CB Richard Ellis.

While there is a tangible expectation that prices in Bangkok will drop significantly, tracking dramatic falls in troubled markets elsewhere, a deeper look shows that in some cases prices of older buildings completed prior to 1997 have changed very little over the past decade while better quality buildings from this earlier wave have seen hikes of only 20 to 40% over the same period.

Although prices of new centrally located condominiums did jump significantly, this was primarily driven by construction costs, which soared more than 50% over the last 10 years. Developers also had to meet buyers' expectation of better quality and in many cases fitted kitchens and air-conditioning were provided for this very reason.

"Pricing in Bangkok never became irrational as in the regional markets of Hong Kong or Singapore or the UK - in London prices have increased more than 300% over the last 10 years," says Mr Pitchon.

He also remarked that end-user demand is a greater force this property cycle than the previous bubble stretching from the 1980s until 1996 which was almost totally driven by speculative purchases.

"Bangkok has changed over the last 10 years, it has become a much more inward-looking city where people want to live and work in the city centre and the reason for this has been the completion of both the Skytrain and MRTA which now fix the position of Bangkok city centre.

"We have seen a change in home ownership preference where condominiums have been far more accepted by Thai purchasers because of the convenience of central location, availability of parking, facilities and security."

The city centre condominium market has also been relatively under-geared because foreigners have not been able to borrow while Thais buying in the prime market are mostly underleveraged.

"There isn't a huge amount of outstanding mortgages on existing property and most existing buildings tend to have found their own price level, whether it's a building that is 10 years old or something that has been recently completed. Each building, once it has been completed for a year, seems to find a pricing level and there are only a limited number of ongoing transactions."

This situation means that those hoping to pick up substantially low priced properties in existing building are likely to be disappointed. "I think the market will tend to come to a halt because I think there aren't very many forced sellers."

However, this does not mean there are no opportunities at all this year but that one has to look in the right place for them. Mr Pitchon pointed out that some developers who do not have the financial resources to hold on to their inventory in completed buildings for a few years would discount.

It is also possible that speculative buyers who no longer see the possibility of prices rising or are unable to pay the final 70% of a condo unit upon the building's completion might sell their contracts at a loss.

"That will be the story that emerges this year where you have got 10,000 units being completed in the city centre market."

While this is a substantial total and further increases the current supply of 58,000 units, Mr Pitchon pointed out that many of these are smaller units, mostly one-bedroom in size rather than two to three bedrooms, because some developers had opted to build smaller units as construction costs climbed.

The flood of 10,000 units entering the market this year could also lead to fewer projects being launched because developers would not want to compete with existing developments' unsold inventory and resale from speculators as well as units in buildings under construction.

While it is doom and gloom everywhere at the moment, Mr Pitchon sees end-user purchasers driving the city centre condominium market forward this year.

"So this is the year of opportunity for a prospective owner-occupier who wants to live in a central location but doesn't want to take excessive risk on a developer's ability to complete."

It is also best that end-users focus on the large number of new units being completed this year, rather than take a chance on a future development, said Mr Pitchon, as he does know of cases where the construction has been delayed.

"My recommendation is you have 10,000 units coming online this year, spend this year choosing the building you are interested in and when they are completed go in and shop around in those buildings, see what the developer is going to offer on his unsold units and what speculators are offering."

CB Richard Ellis also expects future supply of city centre condominiums to be limited, with possibly only 2,500 units entering the market in 2010 and 2,000 units in 2011. However, there may be an overlap because while the bulk of this year's supply of 10,000 will enter the market as scheduled, a portion may be delayed by another six months.

"There is not much new in the pipeline, I think there will be few new launches so if you want to live in central Bangkok my advice is choose something you want to live in, choose quality of development, don't necessarily look at it as an investment, look at the utility value, does it match your requirements in terms of location, space, facilities and number of car parks."

This strategy of looking at property at its core purpose, which is shelter, is particularly important because Mr Pitchon does not expect significant price increases over the next couple of years.

-- Bangkok Post 2009-02-08

[midas]

Oh dear...........I wonder if he intended to contradict his Managing Director this way ..................?

" Thailand's property market cannot be expected to recover from the present slump until 2011, according to Aliwassa Pathnadabutr,

managing director of international property agency CB Richard Ellis (Thailand).

She said the slump began in the final quarter of this year with demand in Thailand's property market plummeting under

the shadow of the global economic crisis. ohmy.gif

"When we saw demand in the property market dropping, we suggested to our customers that they wait and see

As a result our customers suspended investments of between Bt4 billion and Bt5 billion in the last quarter of this year," Aliwassa said last week.

The company's research shows that transactions have fallen in all property segments in the current quarter, some of them

significantly, others slightly. This is a sign that the property market may fall by 10 to 20 per cent next year, the steepest

tumฌble since the financial crisis in 1997, she said. ( The Nation)

[ray08]

"While it is doom and gloom everywhere at the moment, Mr Pitchon sees end-user purchasers driving the city centre condominium market forward this year"

How lucky we are to have a smart chap selling real estate tell us the world is full of doom and gloom,but the Bangkok Condo city market will go forward this year ,Don,t know what he means by forward ,but how good this guy writes Bullsh@%t ,he should change being a fiction writer ,

[thaiwanderer]

usual spin spin spin - things are ok yet there are opportunities so come on down!

The following matra offends:-

''The city centre condominium market has also been relatively under-geared because foreigners have not been able to borrow while Thais buying in the prime market are mostly underleveraged.''

The idea always seems to be that because foreigners can rarely get loans secured on thai property that they are using pure liquid cash for the purchase not obtained against assets elsewhere and that hi so thais are rich and therefore never leverage.

[pkrv]

Well guys - you do not percieve the Thai property market to be deeply segmented? and condos to be no exception? and condos city by city street by street to also perform differently (in THB terms) OK thats an opinion

[UncleFrank]

These real estate companies spend allot in advertising so the local press print these fairy tales to please them.

Don't read Thai newspapers if you want to know what is happening in Thailand.

[think_too_mut]

Central Bangkok condo prices holding

BANGKOK PRICES HOLD FIRM

BANGKOK: -- The price plunges elsewhere are unlikely to be repeated in the central Bangkok condo market.

.... says James Pitchon, executive director of CB Richard Ellis.

Statements he made contravene each other, looks like this wizzard has glanced over discussion boards like this one and picked from 2-3 screenfuls of thread titles.

Remember how knowledgeable and often quoted were Lehman Brothers, Bear Stearns and other criminals who can now be heard squealing like stuck pigs.

[Boater]

well they really need to push the Bangkok market to keep the company afloat, as so far they have pulled out of

1) Samui ( only lasted just over a year )

2) Pattaya

3) and i have also heard they will be pulling out of Phuket

oh well..............

[midas]

Well guys - you do not percieve the Thai property market to be deeply segmented? and condos to be no exception? and condos city by city street by street to also perform differently (in THB terms) OK thats an opinion

It would be interesting to know how many " budget " condominium development's there are in the true CBD?

And as we are talking about Central Bangkok is that the same as CBD?

thaiwanderer

" The idea always seems to be that because foreigners can rarely get loans secured on thai property that

they are using pure liquid cash for the purchase not obtained against assets elsewhere and that hi so

thais are rich and therefore never leverage."

Yes indeed this belief certainly seems widespread from people I have talked to. And even if

Thai's are rich-how many this time around compared to 1997 will be happy to sit on

potentially vacant condominiums in the very expensive price range for God knows how long?

[mommysboy]

Central Bangkok condo prices holding

BANGKOK PRICES HOLD FIRM

BANGKOK: -- The price plunges elsewhere are unlikely to be repeated in the central Bangkok condo market.

The astounding property price decreases in the US, UK, Singapore and Hong Kong are unlikely to be repeated in the Bangkok condominium market because the jumps here have been more rational over the past decade, says James Pitchon, executive director of CB Richard Ellis.

While there is a tangible expectation that prices in Bangkok will drop significantly, tracking dramatic falls in troubled markets elsewhere, a deeper look shows that in some cases prices of older buildings completed prior to 1997 have changed very little over the past decade while better quality buildings from this earlier wave have seen hikes of only 20 to 40% over the same period.

Although prices of new centrally located condominiums did jump significantly, this was primarily driven by construction costs, which soared more than 50% over the last 10 years. Developers also had to meet buyers' expectation of better quality and in many cases fitted kitchens and air-conditioning were provided for this very reason.

"Pricing in Bangkok never became irrational as in the regional markets of Hong Kong or Singapore or the UK - in London prices have increased more than 300% over the last 10 years," says Mr Pitchon.

He also remarked that end-user demand is a greater force this property cycle than the previous bubble stretching from the 1980s until 1996 which was almost totally driven by speculative purchases.

"Bangkok has changed over the last 10 years, it has become a much more inward-looking city where people want to live and work in the city centre and the reason for this has been the completion of both the Skytrain and MRTA which now fix the position of Bangkok city centre.

"We have seen a change in home ownership preference where condominiums have been far more accepted by Thai purchasers because of the convenience of central location, availability of parking, facilities and security."

The city centre condominium market has also been relatively under-geared because foreigners have not been able to borrow while Thais buying in the prime market are mostly underleveraged.

"There isn't a huge amount of outstanding mortgages on existing property and most existing buildings tend to have found their own price level, whether it's a building that is 10 years old or something that has been recently completed. Each building, once it has been completed for a year, seems to find a pricing level and there are only a limited number of ongoing transactions."

This situation means that those hoping to pick up substantially low priced properties in existing building are likely to be disappointed. "I think the market will tend to come to a halt because I think there aren't very many forced sellers."

However, this does not mean there are no opportunities at all this year but that one has to look in the right place for them. Mr Pitchon pointed out that some developers who do not have the financial resources to hold on to their inventory in completed buildings for a few years would discount.

It is also possible that speculative buyers who no longer see the possibility of prices rising or are unable to pay the final 70% of a condo unit upon the building's completion might sell their contracts at a loss.

"That will be the story that emerges this year where you have got 10,000 units being completed in the city centre market."

While this is a substantial total and further increases the current supply of 58,000 units, Mr Pitchon pointed out that many of these are smaller units, mostly one-bedroom in size rather than two to three bedrooms, because some developers had opted to build smaller units as construction costs climbed.

The flood of 10,000 units entering the market this year could also lead to fewer projects being launched because developers would not want to compete with existing developments' unsold inventory and resale from speculators as well as units in buildings under construction.

While it is doom and gloom everywhere at the moment, Mr Pitchon sees end-user purchasers driving the city centre condominium market forward this year.

"So this is the year of opportunity for a prospective owner-occupier who wants to live in a central location but doesn't want to take excessive risk on a developer's ability to complete."

It is also best that end-users focus on the large number of new units being completed this year, rather than take a chance on a future development, said Mr Pitchon, as he does know of cases where the construction has been delayed.

"My recommendation is you have 10,000 units coming online this year, spend this year choosing the building you are interested in and when they are completed go in and shop around in those buildings, see what the developer is going to offer on his unsold units and what speculators are offering."

CB Richard Ellis also expects future supply of city centre condominiums to be limited, with possibly only 2,500 units entering the market in 2010 and 2,000 units in 2011. However, there may be an overlap because while the bulk of this year's supply of 10,000 will enter the market as scheduled, a portion may be delayed by another six months.

"There is not much new in the pipeline, I think there will be few new launches so if you want to live in central Bangkok my advice is choose something you want to live in, choose quality of development, don't necessarily look at it as an investment, look at the utility value, does it match your requirements in terms of location, space, facilities and number of car parks."

This strategy of looking at property at its core purpose, which is shelter, is particularly important because Mr Pitchon does not expect significant price increases over the next couple of years.

-- Bangkok Post 2009-02-08

How do you equate the headline with the only true statement in the piece: 'there is a tangible expectation that prices in Bangkok will drop significantly' ?

The rest is just plain garbage.

[mommysboy]

Well guys - you do not percieve the Thai property market to be deeply segmented? and condos to be no exception? and condos city by city street by street to also perform differently (in THB terms) OK thats an opinion

Clearly another poster (one of many fantasists on this board) who subscribes to the belief that the exception is the rule.

In truth it's sad.

[shochu]

mommy,

u r asute and have figured out that he and the others r working as a team!

[quiksilva]

Correct, its all a conspiracy!

Edited February 10, 2009 by quiksilva