“no sign” of bangkok bubble bursting, says knight knox

Two years ago, Thailand was devastated by tragic floods, which cost the Kingdom an estimated USD$45 billion. Since then, though, the country’s capital has put the water firmly under the bridge with some incredible economic results.

Indeed, 2013’s Global Destination Cities Index named the city as the ‘Number 1 Destination for International Visitors’, with the capital expected to receive 15.98 million international arrivals this year - and investors are following the same route.

“This economic upsurge is very much a result of purple, blue and a host of coloured routes which now sprawl across the metropolis as part of a larger government infrastructure plan, to roll out a major transit system across Bangkok,” explains Knight Knox.

This transit system has caused condominiums to rise up across the city at a rapid pace, with 12,300 units completed along the blue network alone in the last three years.

The proximity of where a piece of land sits in relation to the improvements affects its value enormously, according to Risinee Sarikputra, Director of Research & Consultancy at Knight Frank, who declared that prices of land near the purple line have doubled since 2009 and prices of land close to the Pink Line have reached THB 100,000 per sqm.

Developers, who are paying a higher price for this land to build condominiums on, will inevitably raise the prices of the units, something which can already be seen in the Central Business District, where prices have increased by 7.1% to THB 161,314 per sqm, since the end of 2012. 

This price increase however has not served to deter investors away from the purchase of condominium units, which continue to be the investment vehicle of choice in Bangkok, a trend which has not changed for the past fifteen years.

Indeed, the amount of condominium units bought in the capital has risen from 10,000 in 1998 to over 350,000 today. This continued interest from investors can be seen in the number of units launched in Q1 2013, some 16,000, and their high take-up rate of 62% indicates that the city is still ripe for investment.

The area of Sukhumvit has benefited greatly from this boom period, as new premium projects in the district have become a hot source of interest for investors.  Home to one of the longest roads in Bangkok, if not the world – Sukhumvit Road is 400km long, it is little wonder that condominiums are being raised frantically alongside it at a tremendous pace. Prices have soared in Sukhumvit according to Knight Frank, who claim that prices have risen 11.8% from the end of 2012 in Upper Sukhumvit and prices throughout the whole district have now reached THB 200,000 per sqm.

With work on the infrastructure continuing, and no sign of a burst, the bubble keeps on growing.