Because of the scarcity of new development sites in the CBD [central business district] and early Sukhumvit area, it is likely that new developments will expand towards the late Sukhumvit zone, as potential land plots for condominium development are still available.
As a consequence, a vast number of new condominium supply is expected in this zone, especially around On Nut BTS station, and more condominium projects are expected along the "late zone" of Bangkok's Sukhumvit Road beyond Soi 55, said Risinee Sarikaputra, director of research and consultancy firm Knight Frank Chartered (Thailand).
She said that the overall condominium market along the Sukhumvit strip, from Soi 1 to Soi 107, still showed signs of prosperity, representing a good balance between supply and demand. This is due to various factors, resulting in an overall take-up rate of more than 70 per cent. Condominium markets in different areas along Sukhumvit each have unique characteristics. The company puts Sukhumvit into three sub-markets: Early Sukhumvit (Soi 1-Soi 55), and Late Sukhumvit (Soi 55 onwards).
Based on information collected from 2009 to the first quarter of this year, the take-up rate along the early Sukhumvit strip was a strong 77 per cent. In particular, when taking a look at grade A to premium products, the early Sukhumvit zone is considered the hottest location for the luxury supply. Of the 3,820 units that address the rising demand for luxury vertical living, more than 3,000 units have already been sold - a take-up rate of nearly 80 per cent. Thus early Sukhumvit undoubtedly will remain one of the most prime condo locations among buyers who are looking for top-class urban units. This market trend is anticipated to continue, because of the land limitation in the CBD and early Sukhumvit zone, pushing the prices of and demand for such condominiums even higher.
The average selling price per square metre varied depending on the unit type, location, accessibility to BTS Skytrain and the main road, and material specifications. The price for high-rises was also higher than that of low-rise buildings.
In early Sukhumvit, most projects (either off-plan or ready to move in) located right on Sukhumvit Road in close proximity to the Skytrain line are priced from BT86,000-Bt327,000 per square metre, with an average price of more than Bt100,000 per square metre.
Prices are also expected to rise, and developers will focus on introducing high-quality luxury products, as the land is far too expensive for development of mid-range or economy-class projects. Moreover, it should be noted that factors such as the Asean Economic Community integration, scarcity of land in the CBD, and the rise of construction costs are boosting prices in the prime Sukhumvit area.
According to the inspection of condominium projects from Sukhumvit 55 to Sukhumvit 107, the total supply accumulating from 2009 to the first quarter of this year is approximately 15,604 units. Of this figure, more than 11,000 units have been sold (take-up of 71 per cent), reflecting strong market performance.
There is some caution surrounding demand from speculators who aim to resell units for quick profit. According to condominium developers, about 30-40 per cent of the buyers at presale periods are short-term investors. However, during the transfer period, the number of transferred units correlated with that on sale records, reflecting real demand.
Of the total supply, the new condominiums released in the market at the beginning of 2013 was around 2,933 units, achieving a take-up rate of 46 per cent within the first quarter. Nevertheless, it is important to mention that the new condominium supply in late Sukhumvit is targeted for a different buyer group than the early Sukhumvit market, as all the new supply launched this year are economy-class products situated in sub-roads around the BTS extension route. High-end buyers will only focus on pursuing the remaining units near the existing BTS route in Thonglor, Ekamai, Phrakhanong and Onnut.
When taking a look at prices in the late Sukhumvit market, condominiums in close proximity to an existing BTS station (from Thong Lo to On Nut) and the main Sukhumvit Road have an average price of more than Bt100,000 per square metre. For grade A supply along the existing BTS line, the average price per square metre is Bt138,000, with a range from Bt118,000-Bt150,000. For lower-grade condominiums around the existing BTS route, the average price per square metre is still over Bt100,000, ranging from Bt87,000-Bt120,000.
On the other hand, supply with an average price of less than Bt100,000 per square metre can be found in the area around the BTS extension route, or located deep in sub-roads.
Moreover, the price of condominiums around the late Sukhumvit zone also depends on the proximity to the CBD area. For example, the price of condominiums situated near Thong Lo Station would probably command higher rates than those further out near the extension line.
"The Sukhumvit condominium market's future is bright, particularly in the prime zone," Risinee concluded. "With selling prices continuously rising, this market will attract all type of buyers, including those who exhibit real demand and long-term investors who are either affluent Thais or foreigners.