Bangkok sees significant recovery from flooding
Bangkok's property has "significantly recovered" from the effects of last year's catastrophic floods, CBRE has reported.
CBRE Thailand's market report for 2012 suggested that even the worst hit areas, such as low-rise housing, have resumed market activity, with retail centres reopening and new housing sales taking place.
Indeed, even though developers tend to focus on new projects in un-flooded areas, CBRE found that affected regions were still seeing sales pick up, particularly for the low to middle-end market.
"We believe the desire of purchasers to own a house or townhouse close to future mass transit stations in the suburbs have continued as fears of a repeat flood are now alleviated. Demand for single-detached houses and townhouses will increase but this will be driven by affordability and the attractiveness of the product and location," said Ms. Aliwassa Pathnadabutr, Managing Director of CBRE Thailand.
The prices of condominiums are rising due to higher land costs and construction costs. CBRE believes that for a fixed budget, the majority of the family market will consider townhouses in a good location several kilometres away from a mass transit station in the suburb rather than a 1-bedroom condominium in the city which is at a similar price point. Nevertheless, there will be continued demand for small condominiums from singles, couples and weekday occupation by children attending central city schools and second home use.
In the luxury condominium market, demand is driven primarily by end-users and partly by buy-to-let investors who purchase with the potential for own use in the future. Record prices have been achieved for condominiums in the best locations and best-quality recently-completed projects. CBRE has seen achieved sales prices in the region of THB 160,000 to THB 200,000 per sq.m. for individual units in completed luxury projects such as Q Langsuan, Saladaeng Residences, Athenee Residence and The Park Chidlom.
In the middle and entry-level markets, condominium prices have adjusted upwards, but to a lesser extent than the luxury market. Condominium living is becoming more widely adopted and there is still potential demand particularly in densely populated areas where there has been limited development.
Demand continued to improve in the office market. The overall vacancy rate was 13.86% compared to 14.13% in Q4 2011. In the retail sector, all shopping centres closed during the floods have reopened. Major shopping centres benefited from the V-shaped recovery in the economy. The retail sector has continued expanding both within the downtown and in suburban locations, with focus on large-scale retail such as Terminal 21 and Mega Bangna.
In the hospitality sector, there continues to be strong tourist arrivals. However, the total hotel supply continues to increase in Bangkok, putting pressure on occupancy and rates. CBRE expects that hotel room supply will increase by 28% in Bangkok by 2014.