High-end condos coming back

Construction News

The supply of newly launched high-end condominiums is expected to rise this year as developers are more confident in the Thai and world economies, while lending curbs and higher interest rates may curb sales of mid-priced units,.

Suphin Mechuchep, managing director of the property services firm Jones Lang LaSalle (Thailand), said luxury condo developers had postponed new project launches from 2010 as they were concerned about politics and lacked confidence in the international and domestic economies.

She forecast the number of high-end launches would rise this year with the renewal of demand from overseas buyers.

Last year, newly launched condominium units in central Bangkok and priced around 150,000 baht per square metre totalled only 1,180, down from 2,300 in 2009, according to JLL research. In the same period, newly completed units fell to 2,678 from 3,589.

JLL forecasts 1,894 units in the high-end segment being completed this year.

The sales rate in completed buildings was 96.8% in 2010, down slightly from 97.6% in 2009. Sales rates in new or off-plan projects rose to 76.1% from 61.3%.

Average prices of new high-end projects are expected to increase at least 5% on rising land and construction costs, said Mrs Suphin. Last year, they fell from 162,000 baht a sq m to 155,000 baht as developers adjusted products to fit demand.

The total stock of luxury condominiums will rise to 22,834 this year, from 20,940 units in 2010 and 18,262 in 2009.

Mrs Suphin said the mid-market condo segment in central Bangkok would face a slower sales rate, as completions increase the number of unsold units. As well, buyers may be deterred by rising interest rates or new caps imposed on banks on the amount of a unit’s value they can lend.

The number of newly launched units priced between 90,000 and 100,000 baht per sq m totalled 3,840 last year, up sharply from 1,468 in 2009. The sales rate in new projects was down to 56.8% from 79.2%.

New launches, new sales and sales rates in both completed buildings and off-plan projects will continue to decline in 2011, she said. Mid-market prices will not rise as much as those of high-end segment despite rising costs.

Source: http://www.bangkokpost.com/business/economics/219640/high-end-condos-coming-back

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