C9 Hotelworks Releases Market Update On Bangkok Luxury Condos

Bangkok’s appetite for top end luxury condominiums is accelerating as the geographic mix of products is spreading across the Thai capital. According to C9 Hotelworks new Bangkok Luxury Condominium Market Update a significant number of developers are shifting into more upscale offerings given high penetration in the mass mid-scale segment.

What is apparent from C9’s research is that there is traction from both investment oriented and end users for luxury real estate. That said, speculation at the pre-sales point and flipping units prior to project completion remains visible. Likewise the appetite for premium penthouse units remains an ongoing trend, though unit sizing is becoming rationalized.

Over the past few years the emerging development of high-end projects on the Chao Phraya River is popular for both foreign buyers who enjoy the unique aspect and possibly issue these as second homes, but also Thai’s who view the location as more serene and lifestyle oriented for their primary residence.

In our analysis though the riverside location remains challenged in terms of broad hotel and upscale retail demand. Upper-tier hotel demand remains strongly grounded in the leisure segment, given access issues and the overall limited amount of office supply. Room rate growth for hotels has been restrained by the lack of corporate business and reliance on tourism which has been impacted by lower-rated business from the emerging mass tourism segment.

Taking a forward look at the expansion of the BTS, this will potentially ease the accessibility issue but there is a defined lack of large-scale offices in the catchment area. Another possible concern is the incoming of massive retail complexes that will need to be focused mostly on residential demand and tourism, though these may see some diminished numbers from marginal office-connected footfall.

Taking this into account, there is little doubt that transport and infrastructure are the leading proponents of change and the expansion and diversification of Bangkok’s mass transit network will create a more connected urban background. Three significant re-development entries that are on the radar are the Dusit Thani – Central Pattana (CPM) mixed-use Silom entry, the nearby Suan Luan project by the TCC Group and potentially the massive SRT site at Makkasan.

The pairing of hotels and luxury residences in Bangkok is following a similar trajectory as much of Asia with urban properties seeing greater numbers compared to the legacy beach destinations. A series of new hotel branded residences that are affiliated to names such as St. Regis, Four Seasons, Mandarin Oriental and Ritz-Carlton have become important branding tools. Yet, from our research brand premiums for this properties compared to the large pure residential market is only seeing a premium of four to nine percent. In a nutshell hotel residences may have slightly higher pricing but once you look at demonstrated sales absorption, the pure residential offerings are driving the numbers game.

As we look further to the future, and the continued urban growth of Bangkok the emergence and definition of mini-metros will continue. As in other Asian cities the shift of high net worth individual from their traditional low-rise palatial houses into high-rise urban condominiums is expected to intensify. High-rise living is a coming of age in Asia, as land values surge, there is nowhere to go but up.

Locations are also changing and the Silom and peripheral area with the current wave of mega mixed use project are expected to challenge the Sukhumvit and Thonglor areas and may take some of the momentum from the fast developing riverside area. For now, there is little doubt the luxury residential offerings have captured the imagination of the Bangkok property scene. Perhaps the most relevant point for property developers is that from our analysis of the numbers is that there continues to be upside appreciation and pricing gaps for top end real estate when viewing current and expected demand coupled with the value paradigm versus other global gateway cities.

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