research Q4 2011 CONDOMINIUM Market Highlights A grand total of 42,842 units were offered in condominium launched in the whole of 2011, decreasing from 69,871 in 2010. The take up rate has increased from just 47.2% in Q3 to 57.9% in Q4, however the total unit take up during the second half of last year was at 5,653 units, decreasing by 62% from the first half of 2011. The overall condominium price has been increased by 1 per cent in the last quarter of 2011. Developers had diverse the investment plan by shifting out of to avoid over supply stage.
q4 2011 MaRKET MARKET OVERVIEW buying demand has fallen during the second half of 2011 due to the inundated flood in October, ians escaped flood to many resort destinations which shifted the demand of condominium to the demand of Resort destination condominium such as Pattaya, Hua Hin and Rayong. Supply also slowed down due to the postponement of launching condominium to next year. Price continuously increased due to the increasing of material construction. An influx of onebedroom units launching to respond the strong demand by end-user that has steadily increased resulting from lifestyle changes, particularly from the younger generation of white-collar workers and young couples. supply trend The newly launch of condominium during the last quarter of 2011 was at 7,876 units. The tremendous supply of condominium hit the level of about 261,616 units by the end of 2011, increased from 218,744 by end of 2010. A grand total of 42,842 units were offered in condominium launched in the whole of 2011, decreasing from 69,871 in 2010. The developers have modified the investment strategy by heading out of City of and reducing the overwhelming supply level after the enormous number of launches since 2010. Figure 1 Stock & New Supply, 2004 to 2011 The newly launch of condominium during the last quarter of 2011 was at 7,876 units, increased from 2,417 units in the third quarter. With the government extends the Mass Rapid Transit (MRT) route, this would boost the new supply in the Peripheral Area, with about 65% of total new supply in 2011. Property developers are favouring Rattanathibet, Bang Yai, Chaengwattana and Ratchapruek Road for new projects in anticipation of the extension of rail routes to these locations. The low portion of supply was in downtown on Sukhumvit area and the city fringe on Ladprao area, in which the urban area and prime site was previously most famous area for condominium development. Yet, the city condominium market became saturated and the available land for development is less. Therefore, the land prices of prime location are now expensive which significantly increase the development cost for developers and unit prices for buyers. 2
www.knightfrank.com Figure 2 Stock & New Supply, 2004 to Q4 2011 demand trend The take up rate has increased from just 47.2% in Q3 to 57.9% in Q4. The demand of condominium has slowed down in 2011, our research has indicated that the total take up unit was at 20,560 units, decreasing by 45% year on year. The demand has slowed down due to the inundated flood in during the third and fourth quarter of 2011. ians have temporary relocated to resort cities such as Pattaya, Hua Hin and Rayong, reflecting the increase of condominium demand in the resort cities, whilst the declining of demand of condominium. The take up rate has increased from just 47.2% in Q3 to 57.9% in Q4, however the total unit take up during the second half of last year was at 5,653 units, decreasing by 62% from the first half of 2011. This is due to the majority of supply launched since 2010 to 2011, where the demand growth increased in the slower rate than the supply. The majority of condominium supply in peripheral is mainly targeted for Thais for their own dwellings, most of them are younger generation of white-collar workers and young couples. Figure 3, Demand and Take Up Rate of New Launch between 1H 2009 to 3Q 2011 3
q4 2011 MaRKET pricing trend The overall condominium price has been increased by 1 per cent in Q4. The overall condominium price has been increased by 1 per cent in the last quarter of 2011. The difference between the selling price of condominium in the city fringe area and the city area became closer due to the proximity to the city area from the city fringe as well as the public transportation available in the city fringe area which makes this area is convenient. Also, there are many retail development completion in the city fringe area, thus the city fringe area became the new area for condominium buyers. Figure 3 Average Selling Price of by Location, Q1 2010 to Q4 2011 outlooks Developers had diverse the investment plan by shifting out of to avoid over supply stage. Some developers have diversified their risk by searching the new real estate sector. Whilst some have started to study for our neighborhood countries and entering in order to survive during the sluggish condominium market. The developers had the experiences during the Economic Bubble in 2004, thus the condominium oversupply won t be existed in condominium. Most developers must have growth performance rate every year, shifting to different location, different market and probably out of Thailand will be the best choice for Thailand Economic. However, there are still some developers continue their plan in developing condominium in and they must study hard to survive during this time. 4
www.knightfrank.com APPENDIX Location City Area : This is the area that surrounds the Central Business District as well as the area which is popular for expatriates, tourists and upper class Thais for both shopping and residential area. Another area in the City Area is the area along Chao Phraya River which lies on Charoen Nakorn and Rama III Road. The City Area can be divided into sub-area as followed: Central Business District (CBD): This is the area that encompasses Sathorn Road, Silom Road and Wireless Road CBD corridors. It is an established business location with quick access to Sukhumvit, Rama 3 and the riverside areas. Sukhumvit: This is the section of Sukhumvit Road between Soi 1 and Soi 63 to the north and Soi 2 and Soi 42 to the south. This popular area with expatriates and tourists spans includes the Asoke Intersection on the west to the Emporium Mall to the east. Rama 3 and Riverside: This is the area that stretches along Charoen Na Korn Road of the Chao Phraya River southward just past the Sathorn Bridge and to the north of Sipraya Road as well as the area along both side of Narathiwas Ratchamakarin Road. City Fringe Area : The area is located on the edge of the City Area, provides easy access to the City Area. This area is an alternative for condominium buyers due to the close proximity to many shopping centers and also convenient for transportation. The City Fringe Area can be divided into sub-areas as followed: Ratchada-Ladprao Area: This is the area where the MRT is opened. The area covered both side of Ratchadapisek Road and the beginning of Ladprao Road where there are MRT stations situated. Phahonyothin Area: This is the area which has just started popular in a couple of years. The area covers between Phahonyothin Soi 1 and Soi 13 and Phahonyothin Soi 2 to Soi 14. Peripheral Area : The areas which are not included in the mentioned area. Our analysis will explore three major areas in this locations which are: Late Sukhumvit: This is the section of Sukhumvit Road both sides after the Sukhumvit Soi 63 stretch to the Bang na intersection. Thonburi Area: This is the area where the new BTS extension from Saphan Taksin to Wongwian Yai already opened. Other Areas: This area is the area outside the area already mentioned. Most of the remaining condominium areas are scattered across the city including Srinakarin, Chaengwattana, Kaset-Navamin, Petchkasem and etc. 5
q4 2011 MaRKET APPENDIX Classification Premium: The location is in Central Business District, Sukhumvit (Soi 1-63 and Soi 2-42) and along the area along the Chao Phraya River. The selling price of the unit is above THB 150,000 per square metre. The minimum unit size is 120 square metre. The minimum ceiling height of the unit is 3 metre. The unit decoration must provide high standard specification. Grade A: The location is in the Central Business District, Sukhumvit (Soi 1-63 and Soi 2-42), the area along Chao Phraya River and the Pathumwan to Soi Aree (Paholyothin Soi 5). The selling price of the unit must be in the range of THB 100,000 to 149,999 per square metre. The minimum unit size start is 50 square metre. The minimun ceiling height of the unit is 2.7 metre. Grade B: Any location in. The selling price of the unit must be in the range of THB 60,000 to 99,999 per square metre. 6
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