Bangkok property values resilient

KUALA LUMPUR: The massive flooding experienced by Thailand last year has proven the country’s resilience. This is evident in the capital Bangkok’s property market, which is gaining traction after the deluge.

A BBC report estimated damage of 1.4 trillion baht (RM140 billion), making it one of the costliest disasters in human history. Over 500 people were killed, 12 million affected and business disrupted at some of the biggest industrial parks in the world.

Despite the disaster, Bangkok’s real estate values continue to experience steady growth, according to CB Richard Ellis’ (CBRE) Thailand chairman David Simister.

“In Central Bangkok, prices have continued on a pretty steady upward march,” said Simister during a recent visit to Malaysia.

The industrial sector was hardest hit by the floods, but despite the loss of revenue suffered by the sector the value of industrial land has rebounded, appreciating close to 20% in 1Q12 from last year, said Simister.

“Industrial land is appreciating as there is no longer any space available,” he said. “A recent survey by CBRE Thailand for new companies looking to move into and set up in Thailand could only find 50ha (123 acres) of serviced industrial land available where drainage, roads and connections are already in.”

Despite the floods last year, Bangkok's real estate values continue to experience steady growth.

Measurement for industrial land in Thailand is in rai, which is 1,600 sq m or 17,222 sq ft. Current prices for industrial land start from five million baht per rai.

The residential market is also steady, with values rising for certain condos. The company last year did 10.5 billion baht worth of residential sales. “This comes from probably 20 different projects which has given us a unique overview of the market… We have seen steady capital appreciation in what we consider to be the true Grade-A condominiums in Bangkok.”

An example Simister gave of a Grade-A condo is Saladaeng Residences, “where we are seeing prices typically of 250,000 baht per sq m (psm) currently. The appreciation level is 15% from last year.”

Another project that CBRE is involved in is the Athenee Residence, which was marketed off plan three to four years ago. “Prices have moved consistently from 100,000 baht psm at launch to selling a unit in March for about 190,000 baht psm. Most owners are looking at at least a 50% capital appreciation,” Simister said.

Simister says for foreigners Central Bangkok is the best location to buy units for investment.

He notes that condos with good management appreciate while those which are badly maintained have either plateaued or even dropped in value.

The project which Simister feels showcases the strength of the residential sector is The St Regis Bangkok. Situated on Rajadamri Road near the city’s business institutions, restaurants, and fine boutiques, as well as Suvarnabhumi International Airport 35 minutes away, this leasehold property has units sold in excess of 250,000 baht psm.

“So we are seeing Bangkok really move over the last four to five years from a market where 100,000 baht psm was seen as a top market price to a situation where the top products are now 250,000 baht psm,” Simister said.

“This has been achieved against a very poor political backdrop. But there is  a pretty good economy, a laissez faire economy like Hong Kong rather than a managed economy, and it is continuing to do well,” he said.

Foreigners can buy freehold condos in Bangkok in their own name. And the best location to buy units for investment, Simister emphasised, has to be Central Bangkok. He said the best price range for a unit, depending on the number of bedrooms, would be 10 million baht to 20 million baht.

As a guide, Simister says a studio unit measures around 35 sq m; 1-bedroom units range from 50 sq m to 75 sq m; 2-bedroom units range from 75 sq m to 120 sq m; 3-bedroom units range from 120 sq m to 200 sq m; and 4-bedroom units range from 180 sq m to 300 sq m or 400 sq m.

He also says it is important to liaise with reputable agents who can provide investors with information on the real rental demand in the city.

“Yields are generally 4% on-year for property,” said Simister. “In some cases, well-refurbished older properties are producing 7% to 9% yield while small units in certain areas can achieve about 7% yields.

The values of office and retail property are holding steady, according to Simister.


This article appeared on the Property page, The Edge Financial Daily, June 8, 2012.