Demand for 2 and 3-bedroom condos outstrips supply in Bangkok

KUALA LUMPUR (May 2): The Bangkok property market is seeing the return of foreign investors in response to the stabilising political situation and lack of opportunity in their own markets, according to the CB Richard Ellis (CBRE) Bangkok Residential Market 2015 Forecast.

The report said the domestic midtown market is experiencing a generational shift as younger, smaller households relocate to mass-market condominiums.

Most new condominiums are one-bedroom units and there is limited stock of two, three and four bedroom units for rent in the most popular expatriate locations such as Silom, Sathorn and Sukhumvit.

“In the first three months of this year, the downtown luxury market has been an overall outperformer, whereas the midtown suburban market has been a lot slower,” executive director and head of CBRE Research (Thailand) James Pitchon told


Although downtown locations have high sticker prices per square meter (psm), the downtown luxury market of large units is very strong and achieving record prices, said Pitchon.

The downtown market offers products in the middle to luxury segments. A recent mid-market downtown project, Ashton Chula-Silom by the BTS Group, was launched at THB200,000 (RM21,797) psm with over 1,000 units in total. These one and two-bedroom units range in size from 24.5 to 34.5 sq m and 55 to 65 sq m respectively. In comparison, a super-luxury project in a prime location downtown, Nimit Langsuan by Pace Development Corporation PLC, offers 188 units of mostly two and four-bedroom units (78 to 617 sq m) priced  from more than THB25 million upwards.

Super-luxury developments downtown normally offer exclusivity, and comprise fewer than 200 units in total. These also tend to be large in size.


As for the midtown suburban location, Pitchon said the area caters more for the mid and mass markets and is seeing slower growth from an additional suppy of more than 80,000 units completed last year.

“This is purely a one-bedroom market and it is seeing quite a lot of softness created by the peak incoming supply, apart from the slower economy that has affected low-income earners the most,” he said.

Pitchon said the mass market looks at accessibility, affordability and size. Units cannot be too small; most buyers select one-bedroom units with an average size of 35 sq m. This market is particularly affected by rising land costs and falling disposable incomes.


The two main rental markets in Thailand are the top-end for expatriates and the lower-end for Thai tenants who cannot afford to buy. Because most Thais want to own rather than rent their apartments, there is almost no mid-range rental market, said Pitchon.

“Expat tenants want to live in downtown areas, so rental investors have to look at the downtown expat market. The ideal products are probably two and three-bedroom units as there is a limited supply of these, as well as apartments, which are single-ownership buildings with few units,” said Pitchon.

Some 70% of condominium supply comprises one-bedroom units. However, a recent CBRE residential rental transactions survey shows that 70% of 400 recorded transactions in the downtown market were for two and three-bedroom units.

CBRE forecasted that demand from expatriates for two and three-bedroom units in the rental market will exceed supply in areas popular with the community. The shortage of two and three-bedroom units will also raise rents, said Pitchon.

The one-bedroom rental market is expected to be soft or flat due to new supply.

Pitchon said gross yields in the condominium market are between 4% and 6%. Projects launched 10 years ago and sold off-plan for THB100,000 now fetch around THB200,000.

He expected developers to focus on clearing unsold inventory for midtown projects scheduled for completion this year and for the midtown market to slow.

However, developers will continue to be attracted by record prices in the downtown market and there will likely be more launches this year as a result.

Pichon cautioned that “it is not clear whether everyone can meet the requirements that capture the market’s imagination”.

CBRE’s headline forecast for the year is for a likely increase in lump sum rents for two, three and four-bedroom units, the first such rise in 25 years. Investors who buy-to-rent stand to benefit from such an eventuality. 

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