New homes in Bangkok are becoming too expensive because developers are finding it difficult to acquire land at affordable prices, according to analysts.
As a result most new residential projects launched on the market have been one bedroom units to try to attract buyers, says the latest market review from property consultants CBRE.
It points out that buyer are being priced out of the residential property market and there have been significant price rises for the handful of developments that are seen by the Thai market as being the best located best quality projects.
As a result of this the price for rented properties are also increasing as those who cannot afford to buy look for rentals.
The total completed supply in downtown Bangkok reached 95,042 units, up from 93,593 units, a 1.5% increase in the second quarter compared with the first, and an annual increase of 6.8%.
The CBRE survey also shows that the total number of units occupied by owners or tenants increased from 68,436 in the first quarter of 2012 to 71,255 in the second quarter and the occupancy rate increased to 75%.
It says that vacancy rates will rise in older buildings, particularly buildings which have units available for rent as tenants will prefer to lease units in new buildings. The Pathumwan area has the highest average occupancy of 80.5% while the Outer Sukhumvit area achieved the lowest at 54.9%.
The average re-sale price of completed upscale units and above increased by 13.2% year on year from THB126,835 per square meter in the second quarter of 2011 to THB143,590 per square meter in the second quarter of 2012.
Central Lumpini had the highest average achieved price of THB163,550 per square metre, an increase of 11.1% from the same period last year. This is followed by Sathon/Silom at THB 139,258 per square meter and Sukhumvit at THB127,961 per square meter.
In the second quarter the total apartment supply in the downtown area of Bangkok was 11,763 units, down 0.6% year on year. There were 54 units in three projects located in Silom-Sathorn and Sukhumvit. Total supply fell because some existing buildings were demolished or changed use.
The occupancy rate increased from 86.6% in the last quarter to 88.3% this quarter, up 1.8% quarter on quarter and by 3% year on year.
Apartment rental rates increased in the city, except for the Riverside/Rama III grade A and grade B units. Achieved grade A rents were highest in the Central Lumpini area at THB481 per square meter per month, an increase of 4.9% quarter on quarter and up 12.2% year on year.
Both the downtown and midtown markets continue to be dominated by Thai purchasers and CBRE believes that the mid market will continue to be a one bedroom market especially as extensions to the mass transit systems makes more areas accessible presenting some opportunities for condominium development especially along the purple and blue lines.
The report says that generally the market is being driven by end users rather than speculators or buy to rent investors and about 85% of purchasers of off plan units are Thais.
The midtown market appears to be increasingly driven by end user purchasers who are almost all Thais.
‘This means that there is a maximum range of budgets which seem to range from one million baht to around three million baht, depending on size and location,’ the report says.