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source: Bkk Post May
The luxury property market is still strong due to healthy demand and high
purchasing power, reflected in the fact that fewer than 20% of purchasers seek
loans, according to Chatchai Payuhanaveechai, a senior vice-president at
Kasikornbank.
Most buyers of luxury units pay cash as they are seeking better returns than
from bank deposits in the face of inflation that is hovering around 6%, he said.
Yields on bonds and debentures are also seen as unattractive and stocks are too
volatile, while prime real estate can bring rental returns of 5-8% per year.
''You need to know the real estate market and each asset's liquidity. Choosing a
good location is the key,'' Mr Chatchai said.
Developers of luxury units are offering more than 7,000 units at 24 projects in
an exhibition taking place until May 18 at Siam Paragon, while three property
brokerage firms are looking for combined sales of 2.75 billion baht.
Aliwassa Pathnadabutr, managing director of the property consultancy CB Richard
Ellis (Thailand), said demand in the segment remained healthy.
Unit prices have been increasing at between 7% and 15% a year depending on the
project and location, while units at the very top end of the market can fetch
nearly 300,000 baht per square metre, she said.
Sixty percent of luxury property buyers are Thais and 40% are foreigners, up
from 15-20% in the past, according to CBRE.
''Confidence is a major factor affecting decision-making and demand in this
segment,'' Ms Aliwassa said.
CBRE is selling six projects worth a combined 15 billion baht and hopes the
exhibition would generate sales of two billion baht. At a similar event last
year, the company generated 800 million baht from five projects.
Harrison, another participating real estate brokerage, expects sales of 600
million baht from eight projects where it has four billion baht worth of units
on offer.
Phanom Kanjanathiemthao, managing director of the property agency Knight Frank
Chartered (Thailand), said his company was selling three projects worth 10
billion baht and expected to sell 40 to 50 units worth 150 million baht, up from
50 million baht from a single project in the 2007 showcase.
One of the three projects is the 400-unit My Resort condominium worth two
billion baht at the Phetchaburi-Asok Junction, being developed by Everland.
After a month of pre-sales, 20 units worth 100 million baht have been sold.
''Demand in the high-end segment is strong but prices are up 20-30% due to
higher costs of construction and land. Developers needed to increase their
marketing budget as sales slowed down last year,'' Mr Phanom said.
According to the company's research, average prices of Bangkok condominiums have
risen from 65,000 baht per sq m to 82,000 baht in the past year. New
condominiums in Hua Hin are fetching 120,000 baht per sq m, up from 85,000 baht,
as construction costs are 10-15% higher and land prices in the resort town have
risen 20-30%.
Somchao Tantaterdtham, president of the Thai Real Estate Association, said
transfers of residential units during the first two months of 2008 increased
from the same period last year due to higher confidence among consumers.
Significantly, transactions were up even though new tax incentives approved by
the government did not take effect until late March.
Transfers of single houses and townhouses totalled 1,200 units in January and
1,167 in February, up from 903 and 1,150 units respectively in the same two
months last year.
Condominium unit transfers totalled 973 units in January and 888 in February, up
from 616 and 759 respectively in January and February 2007.
''Risks remain. Higher oil prices affected overall construction costs while
steel prices never go down. Under such circumstances, the government should
support building the investment atmosphere,'' Mr Somchao said.
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