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Speculative Demand Boosts Rush to Build Condos in Bangkok Featured

Demand for condominiums from Thong Lor to Sukhumvit Soi 107 is showing signs of higher speculative activity than in other Bangkok locations, with a supply of more than 10,000 units worth nearly Bt50 billion in existing projects and new ones launched in 2013.

A elevated rail between Thong Lo Skytrain station and LaSalle, near Bearing station, found nearly 50 condominium projects recently completed or at some stage of construction along the route.

They are a mix of projects located close to the main road or mass-transit system and those as far as a kilometre from Sukhumvit Road.

Some were launched between 2010 and 2012, and are now completed and ready for transfer to customers seeking a residential location close to the mass-transit system, which makes their travel easier and cuts transportation costs.

At least 30 condo projects with more than 10,000 units worth up to Bt30 billion have been delivered to customers since the beginning of 2011, while there are at least an additional 11 new projects launched in 2013, with a combined 4,200 units worth Bt21 billion.

Most of the new projects launched on Sukhumvit Road from Thong Lor to Sukhumvit Soi 107 offer prices in the range of Bt1.3 million to Bt5 million per unit.

They are between 50% and 75% sold, depending on the closeness of the location to the main road, and have been developed by both listed and non-listed property companies.

Resale market growth

Meanwhile, demand for resale condominiums in the area has also increased, by 20% to 30%. Prices have risen between 10% and 20% from the presale level.

"Although this area has seen more new condominium projects launched, demand for resale condominiums continues to grow because some home-buyers need to purchase a ready-to-stay property and resale prices are still lower than buying in new projects open for presales at this time," said Pumipat Sinacharoen, managing director of Bangkok CitiSmart, a broker and agent for resale homes.

While accepting that some of the demand in the area could be from speculators, he said there was still real demand because condo projects were still being transferred to customers without any barriers facing property developers.

His conclusion, therefore, is that there is currently no sign of a bubble in the area due to speculative demand.

However, Real Estate Information Centre director-general Samma Kitsin said the area was becoming significantly oversupplied as a result of the number of property firms launching condominium projects.

Some of the demand is from speculators booking homes which they intend to resell for a quick profit, he said, adding that this is going on for properties priced above Bt3 million.

Speculators are estimated by the centre to account for between 10% and 20% of current demand, depending on the proximity of a project to the main road, he added.

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