The largest development is a THB30 billion (USD931 million) joint venture by Siam Piwat, Magnolia Quality Development Corporation and Charoen Pokphand Group. It will be a mixed-use complex to be built on a 16-acre plot that will house a hotel, residential and retail spaces.

Country Group Development PLC will also establish a THB10 billion (USD310 million) mixed-use Landmark Waterfront property on a 14-acre land comprising 352 condominium units, a 101-unit Capella-branded hotel and a 305-room hotel to be operated by Dubai-based Jumeriah.

Other high-profile riverfront projects include The Peninsula Bangkok in Klong San worth THB5 billion (USD155 million), the Avani-branded hotel by Minor Hotel Group, the 294-unit Menam Residences valued at THB3.3 billion (USD102 million), and Raimon Land’s THB1 billion (USD31 million) project The River Residences, which will launch 92 buy-to-let units in June.

Developers are marketing the properties to affluent locals and expats, especially from China, Hong Kong, Japan, Singapore and the United Kingdom, according to Bangkok Post.

 

Saenphin Sukhee, GOLD's managing director of residential development, said, “the political situation will have a short-term impact on home purchasing power and the Bangkok property market, particularly single houses.”

"If the new government wants to expand the economy, the property market will be the first sector it will stimulate," he said. "Despite the many political crises we have endured, property developers never get smaller in size – they have doubled.” According to Mr. Sukhee, GOLD is not concerned about high household debt affecting loan approvals. He affirmed, “If homebuyers' credit is not tight due to a record of non-performing loans or being on a credit blacklist, commercial banks will continue to provide mortgages as usual.”

Moreover, the country shows several positive factors towards promising real estate in Bangkok for the future. These factors include a drop in the policy interest rate, a deduction in personal income tax, and a decrease in unemployment that is at 0.8% at the moment.

Besides, the National Economic and Social Development Board reported some positive forecasts regarding property purchasers in Thailand. In fact, low-income buyers are thought to rise from 17 million up to 20 million, while middle-income ones will rise up to 17 million (12 million in 2013). Thailand definitely remains the place to invest in Southeast Asia.

 

Indeed Thailand has been recently elected among the top ten most-searched countries worldwide in Bangkok condos portals and although the protests have been largely violent-free so far, the country may not keep his status in the following months unfortunately.

BTS Property Group is cooperating with several Singaporean investors and it appears the country advises its citizens to be careful towards investing in the Kingdom for two weeks already. Some of our clients mentioned their fear and confirm the general opinion in the city was not positive as of now.

In fact, a lot of investors expect Bangkok condo for sale prices to drop during the political instability but it is not certain to happen for the following reasons: actually, there was no decrease at all in Bangkok property prices during 2008 and 2010 riots in Bangkok. Instead, prices rose substantially.

Basically, the explanation is pretty simple and could be exposed as follows: Thai buyers, who count for about 90% of the whole market, will continue to buy as they are used to this unstable political situation in the Kingdom.

From a local point of view, these protests are not so much of a big deal. In fact, Thailand has known an incredible number of coups and state of emergencies and the current riots in the city are just another illustration of how Thai people do things. With prices that remain attractive as compared to other major cities in Asia, Bangkok Real Estate still deserves huge attention from property investors who shall come back in force when the calm returns.

A survey found that the top listed developers plan to launch 235 projects in Bangkok and the provinces during the course of the year, covering the whole spectrum of condominiums, detached housing, townhouses and twin-houses.

Pruksa Real Estate has the biggest plans, intending to launch 50 projects worth Bt50 billion, which is almost the same level as this year.

Sansiri is the next most ambitious player, with plans for 40 new projects worth about Bt40 billion. This is lower than this year's level, as the company has changed its business strategy and will now get an environment impact assessment (EIA) permit before introducing each new project.

Land and Houses and Supalai, meanwhile, each plans to launch 24 projects - nearly the same as this year - while other listed developers' plans are summarised in the accompanying graphic.

"Despite the ongoing political turmoil, we believe it will be a short-term issue in relation to the demand in the market, which is still growing both in Bangkok and the provinces. As a result, we plan to launch 50 new residential projects in Bangkok and upcountry," said Pruksa Real Estate chief operating officer Lersuk Chuladesa.

Outside of greater Bangkok, the company will expand beyond the four provinces in which it is currently active - Phuket, Khon Kaen, Chon Buri (Pattaya) and Chiang Mai - during the year. The new provincial focus will be in the Northeast and tourist destinations, he said.

Meanwhile, the company targets revenue growth of 10 per cent next year, he said, adding, "We believe housing demand will continue to grow in 2014, and especially real demand among buyers purchasing a home in which they will live."

Property Perfect chief executive officer Chainid Adhyanasakul said about 40% of the company's 15 new projects next year would be condominiums.

It will concentrate on relatively low-rise condo designs of only eight storeys, because these will require less labour than high-rises and also take less time to construct, at 12-18 months. This will generate income faster than a high-rise condominium project, he said.

The company expects home prices next year to rise by at least 10%, partly due to higher land prices, while the cost of labour will also increase because of the shortage of workers.

This year saw more than Bt100 billion worth of condominium projects launched, swelling the demand for construction labour, he added.

Supalai president Prateep Tangmatitham said the company would spend Bt5 billion to buy land for the development of 24 projects next year, while Bt1 billion would be for expanding overseas investment, especially in land in Melbourne, Australia, for the development of a residential project for sale.

The company targets revenue growth of more than 15% next year, from targeted revenue of Bt14 billion this year.

Eight of the 24 projects to be launched by Supalai next year will be condos, and the remainder will be detached-housing and townhouse projects.

At least seven projects will be in the provinces, including one each in Ubon Ratchathani and Nakhon Ratchasima.

"We are continuing to launch more projects in 2014 after seeing residential demand both in Bangkok and the provinces. The country's political problems are a short-term issue that will have less impact on real demand in the market," Prateep said.

Fewer high-rise projects

Around half of the new residential projects to be launched by the end of next year will be condominiums, well below the 70-per-cent level this year.

This is to a large extent because property firms launched a higher-than-normal number of condominium projects in 2012 and during the course of this year, and these take time to build and deliver to customers from 2014 through 2016.

Sansiri president Srettha Thavisin said the company would reduce the number of condominium projects to be introduced in 2014, now that it has a condo backlog of more than Bt40 billion that will be delivered to customers through to the end of 2017.

"We will focus on low-rise condominiums of about eight stories, rather than high-rises. We will also only launch projects when they have been granted an EIA permit. This will build customer confidence when it comes to buying in one of our projects," he said.

Property Perfect CEO Chainid Adhyanasakul also said his company's condominium projects to be introduced next year would be eight-storey buildings, as it would take no longer than 12 months to construct each one.

This will reduce construction costs and also speed up income generation for the company.

However, the number of Property Perfect projects due to be launched in the next 12 months will be lower than this year, as condos launched in 2011 and 2012 will be completed and transferred to customers from next year through to the end of 2016, he said.

Research by the Government Housing Bank's Real Estate Information Centre confirms that next year should see fewer condominium projects than this year's total of up to 75,000 units, because of an oversupply amid higher construction costs.

The centre's director-general, Samma Kitsin, said a persistent labour shortage meant property developers could not construct and deliver homes to their customers on time, forcing them to limit their 2014 project launches.

He added that housing prices also looked like increasing by 10-15% next year, driven by rising costs of construction materials, land and labour.

This year, the average price of a detached house is about 25% higher than 2009's Bt4.72 million, rising to Bt5.91 million. Townhouse prices have also increased, from an average of Bt1.66 million in 2009 to Bt2.25 million this year - up 36%.

In the same period, condominium prices have increased from an average of Bt68,000 per square metre to Bt100,000, some 48% above 2009 levels, he said.

The report offers an insider perspective from a leading developer on real versus speculative demand in the condominium sector, which segments may have been underserved during the sector’s rapid expansion in recent years, and expectations for the evolution of the condo market going forward.

In Bangkok, condominium demand remains strong; however, with developers in recent years rushing to deliver one-bedroom units along mass transit lines, other product types have been left potentially undersupplied. In particular Raimon Land has observed a strong reduction in vacant supply of larger, family-size units in recent months. Going forward this may mean a rise in the number of larger or alternative unit configurations.

Raimon Land’s report indicates that throughout the past 12 months, a total of 30 projects comprising 14,059 units were completed in the capital, most of which were one-bedroom units in midtown areas. Over the next 2 to 3 years, more than 24,000 units are expected to be completed in these midtown areas, such as Rama 9, Ratchada, Lat Phrao, Paholyothin, and the Silom and Sukhumvit BTS Line Extensions. In downtown areas, 11,500 units are expected to be completed.

Pricing continues to rise, with 60% of new launches now asking prices above 100,000 baht per square metre and 5% asking above the 200,000 baht per square metre mark. Take-up rates are healthy across all segments, selling out 74% of new launched units on average. The price increase, however, is putting pressure on rental yields, which are ranging from 4 to 7% for new completed projects.

“At the moment we clearly see two parallel trends in the Bangkok market,” said Simon Dervillé, Raimon Land Deputy Vice President for Business Development. “In downtown areas, we still see high potential for projects in the high-end luxury segment, where demand for large-size units remains strong from both local and foreign buyers. And in midtown areas, we will continue to see more projects provided that banks continue to support both developers and homebuyers, which they have done a good job of so far.”
In Pattaya meanwhile, luxury beachfront projects are no longer the exclusive attraction in the market, as new downtown developments are now steadily being launched in Central and South Pattaya, emphasizing the urban lifestyle and proximity to other amenities. Beachfront projects are continuing to attract customers in the high-end segment, but supply is increasingly limited by the lack of available land.

To emphasize the point, in the past 12 months, four projects with a combined 1,008 units were launched in North Pattaya. Of those, just one – Baan Plai Haad, which features 353 units – was classed as beachfront. Selling prices at Baan Plai Haad are about 100,000 baht per square metre. A year earlier, the luxury condominium project Zire Wongamat, which comprises 450 units, was also launched along Wongamat beach, and is now selling between 125,000 to 150,000 per sq m.

So while beachfront locations, such as those at Wongamat and Naklua in the North, are the most sought after, Pattaya has also been keen to develop other areas of the city.

As a result, there are now several high-quality developments close to the city’s non-seafront attractions, such as shopping centres, which offer easy access to the city centre. Other projects set back from the coast have sought to establish their own unique selling points. The Golden Tulip Hotel & Residence Pattaya, by Tulip Group Thailand, for instance, offers buyers a hotel-quality management service, while Savanna Sands by Universal Group is hoping to attract premium clients with its resort-style design.

The report says developers are also responding to the growing demand from Thai buyers for getaway properties. A total of 13,152 units were completed within the past 12 months, with an impressive take-up rate of 87%. The majority of those units were in projects located in Central and South Pattaya.

With 9.2 million visitors expected in 2013, tourism remains an important driver of Pattaya’s property market, with increased visitor arrivals and customers from Russia, Japan, and China. Unlike previous years, when foreign buyers were primarily looking for larger units, recent condominium buyers from these countries have been more interested in vacation homes, priced below 5 million baht, where they stay for shorter periods.

Based on Raimon Land sales in Pattaya, domestic buyers still dominate the market in terms of nationality but constitute a smaller percentage overall compared with 2011. The Russian market is still strong with a growing number of Asian buyers, notably Chinese and Japanese nationals. Indeed, Asian buyers are expected to continue forming a bigger portion of the condominium market in the future.

Market-wide in Pattaya, the average selling price is now at 71,357 baht per square metre, an increase of 21.2% year-on-year. This is due to the escalating cost of land, which has typically led developers to opt for high-rise over low-rise developments. Within the next three years, nearly 25,000 units are expected to be completed in Pattaya, a large percentage of which will be one-bedroom units measuring less than 40 square metres.

“My concern is that today only 48% of the newly launched units have actually been sold,” commented Mr. Dervillé. “The good thing is that the demand is there, but the challenge is that there are too many projects in the pipeline.”

Major developers in Bangkok have taken note of the evolving market opportunities in Pattaya and are now establishing a presence in the city. This trend may limit the occurrences of projects developed by smaller players that experience financial problems and put their developments on hold indefinitely, which has happened in Pattaya in the past.

“Lately, we have seen a situation in Pattaya where there are many players, too many projects being developed, and not enough construction companies to build them. With the arrival of well-established developers from Bangkok, we will see better quality projects and hope the market will consolidate. There is great potential for the Pattaya real estate market but it needs to be regulated,” added Mr. Dervillé.

Statistics indicate that the Pattaya condominium market is set to continue growing in 2014 and in the years ahead. To prevent the market overheating, the report suggests that developers of low- to mid-segment condos should seek to tighten their buying conditions, perhaps by requiring higher down-payments and booking fees. However, with the average take-up rate around the 50% mark, it concludes that this might not happen just yet.

Pruksa Real Estate president and CEO Thongma Vijitpongpun said the political crisis had not had a great effect to date on the market up to this point. "We believe the property market will show [full-year] growth of less than 5% from last year's level," he said.

Although the number of visitors to its residential projects has fallen off to some extent, the company's presales and total revenue remain strong because most buyers who plan to purchase a home in which to live, will still do so regardless of the political situation, he said.

"Politics may have had an impact on the speculative market, but it has not done so on real demand," he added.

Supalai managing director Atip Bichanond, meanwhile, said its customers had continued to have their homes transferred on time despite all the political uncertainty in the current quarter.

While the number of potential new buyers visiting Supalai's residential projects is lower than normal, the company believes this will not negatively affect its financial results in the final quarter, he said.

"We have a backlog worth Bt6 billion to transfer in the current quarter," he added.

LPN Development managing director Opas Sripayak said the company's construction process had not been affected by the political turbulence, and that on-time delivery to customers was continuing.

"The political problems may have some effect on new buyers in the current quarter, but will not impact our financial results for the period, when all our customers have continued to transfer on time," he said.

The company is maintaining its total revenue target of Bt15 billion for the year, after posting revenue of Bt10.2 billion and net profit of Bt1.7 billion for the first nine months, Opas added.

A survey found that 10 condominium projects had been launched since the beginning of last year on Phaholyothin Road, from the Lat Phrao junction through to Victory Monument.

They comprise some 10,000 units in total, worth more than Bt50 billion.

Most of them offer units starting in the region of Bt1.9 million apiece and have been developed by listed property companies including Pruksa Real Estate SC Asset Corp, Noble Development, Sansiri and Land & Houses - and by one non-listed company.

The projects have experienced successful sales because of their location close to BTS Skytrain stations, namely, Ari, Saphan Khwai and Sanam Pao.

Unlisted D'Well Grand Asset is one of the latest companies to launch a condo project in the area, with its D'Memoria Phaholyothin 8 near Ari station targeting working people.

The project has already sold 40% of its value of Bt580 million. It comprises 123 units at a starting price of Bt3.3 million apiece.

Managing director Thavanan Tanesdechsundhara said he was proud of the D'Memoria Phaholyothin 8 and confident of its complete success, given that it is in the inner business area near Ari Skytrain station.

The concept of the development is to tap the new-generation target group, members of which have a modern lifestyle, yet love nature and tranquility and enjoy private leisure, he said.

The project is a low-rise building with only eight storeys. The concept features a design which reflects the aesthetics of harmony under the new idea in Thai architecture - the art of recreation for real happiness - he added.

Since holding an exclusive presale at Villa Ari in mid-November, with a promotion of a 10-per-cent down payment and a discount of up to Bt100,000, more than 50 units have been sold.

D'Well Grand Asset is strongly confident that sales will reach 70-80% within three months of the launch, with a focus on direct marketing as the main strategy.

"Inner Phaholyothin - Saphan Khwai through to the start of Lat Phrao - is a high-potential business area," said the MD.

"From research and analysis, the location is ranked one of the top 10 business areas in Bangkok with the growth of vertical development. Currently, there are large office buildings with many sources of jobs.

"Definitely, following this is the development of condominium projects to support working people and people whose purchasing power is at the B+ level.

"Transportation is very convenient; that is, the road network, and proximity to the expressway and the mass-transit lines of the BTS Skytrain and the MRT. It is one of the favourite locations for developers.

"When we got this piece of land, we were very proud and determined to create a quality residential project in the heart of the city - in a shady environment close to nature, as the road is a soi where the housing is very private," he said.

D'Well Grand Asset aims to grow further in the property sector, developing projects with proficiency in design and a concept that matches the market in the present economic era, said Thavanan.

The developer considers unit size and location as the priority and uses a strategy of introducing niche products with simple, memorable and relaxing designs for its target group.

Its many proven projects to date include the d'65 Condominium, the d'25 Thonglor and the D'Habitat Ratchapruek low-rise housing project.

The area from Prachanukul junction through to Prachachun Road in Bangkok is witnessing a rush of condominium launches - comprising more than 10,000 units worth over Bt40 billion in total - with the projects largely following the paths of two new mass-transit rail routes.

Construction of the Red Line from Bang Sue to Taling Chan is scheduled for completion in 2016, while the Purple Line from Bang-Sue to Bang Yai is scheduled to be ready in 2020.

According to a survey in this week, new condominiums in the area are being offered for between Bt1.3 million and Bt5 million per unit, with some fetching even more. Most of them are high-rise projects.

For example, Supalai has introduced its latest condominium project, the Bt4.3-billion Supalai Veranda Prachachun, which comprises 1,705 condo units and 26 commercial units.

Property Perfect has launched the Bt4.2-billion Metro Sky Prachachun, which comprises 1,356 units at a starting price of Bt1.9 million apiece - an average of Bt67,800 per square metre.

Grand Unity Development, meanwhile, has introduced four condominium projects on Prachachun Road worth more than Bt3.3 billion combined.

Two of the four were in fact launched in 2011, and the other two this year. Together they have more than 1,000 units.

Then there is Sena Development, which has launched The Niche Mono Ratchavibha, located close to Prachanukul junction. The Bt2-billion project offers 840 units at a starting price of Bt1.9 million apiece, or about Bt63,300 per square metre.

"We have introduced our latest condominium on Prachachun Road after seeing strong demand in this location, where land prices are still lower than in the central business districts [CBDs]. But this location also will have two new rail systems, the Purple and Red lines, in the future. There is a challenge for home-buyers wishing to purchase a property in this location," said Supalai managing director Atip Bichanond.

A survey by the developer found the supply of residential projects in the Prachanukul junction-Prachachun Road area comprised up to 10,000 units, some 70% of which have already been sold, he said, adding that this was largely local demand from people working close to the location.

"Prachachun is a residential area that has an older community that requires homes when their families expand and want to stay to close to their loved ones. As a result, when property firms launch residential projects in this location, they succeed in selling out," said the MD.

According to the Real Estate Information Centre of the Government Housing Bank, new residential projects launched around the Purple Line route from Bang Sue to Bang Yai comprise more than 6,600 condominiums, detached houses and town-houses.

Some 83% of the total have already been sold, while the demand is focused on homes costing up to Bt5 million.

Demand in the area is real rather than for investment or speculative purposes, because of the proximity to major workplaces such as the Commerce Ministry and Siam Cement Group, said the centre.

Banks have tightened up on lending to individuals, as household debt had soared to almost 80% of gross domestic product as of the end of June. This could raise the mortgage rejection rate and delay the purchasing decisions of new customers.

Launches in the first nine months rose 28.5% by units and 36.2% in value from the same period last year, according to the Agency for Real Estate Affairs.

Most of the new projects are condominiums, and many are likely to be completed this year. This would take this year's condo completions to a record level, according to CBRE Research Thailand, Colliers International Thailand and some large developers.

However, there may be some construction delays due to the chronic labour shortage.

In Fitch's view, the impact on large listed developers with strong brands and well-diversified product portfolios should be limited, given their ability to adjust their product mix to maintain their take-up rates.

The shift in developers' strategies to the changing environment is also evident through the slower launches in September, as well as a shift of focus to the higher income segment.

With continued urbanisation and economic growth, this risk of widespread oversupply should not be imminent. A glut may surface only in some locations, especially in areas where developers are targeting lower-middle to low-income home-buyers.

However, the competition among large developers is likely to intensify and may put pressure on prices and margins.