In 2023, real estate developers are rushing to clear stock, cutting condominium prices by 7-15% from pre-sale levels. This presents a golden opportunity for investors ready to purchase at lower prices. Although the overall real estate market is sluggish, the rental market is expected to continue thriving.

         

         Ms. Suwannee Mahanrongchai, Deputy Managing Director of Strategic Development and Asset Management at Plus Property Co., Ltd., stated that investment in real estate has cooled compared to the past due to various factors, including a slowdown in the real estate market in line with the economic situation, as well as regulations on housing loans (Loan to Value Ratio: LTV). This has prompted property developers to expedite the clearance of old stock, while domestic purchasing power remains weak. Additionally, foreign buyers have slowed down due to the global economic situation and the strengthening Thai Baht, along with the impacts of the COVID-19 virus, leading to a reduction in condominium prices, currently 7-15% lower than initial sale prices. This aligns with the index of condominium prices in Bangkok and its vicinity, which has been declining since the second quarter of 2019. Therefore, the current drop in condominium prices presents a good opportunity for those ready to invest, especially long-term investors, as they can acquire properties at lower prices that can be rented out immediately.

 

        According to a survey by Plus Property's Research and Development Department, despite the sluggish real estate market, the rental market continues to grow and provide good returns, particularly for condominiums, which still offer valuable returns. In central Bangkok, the average rental yield is 4.0%, while in mid-Bangkok it is 3.3%, and in outer Bangkok, it is 4.1%.

From the survey, it was found that from 2017 to 2019, there were approximately 405 condominium projects completed and still on the market, with a cumulative supply of 215,479 units. This is a decrease from the previous year, as some supply has been absorbed. Additionally, new projects launched in the past 1-2 years are still under construction. In the future, it is expected that a significant number of completed units will be available between 2023 and 2025, around 147,429 units from 247 projects, pressuring many developers to expedite sales in the market. This can be seen in some areas where prices have been reduced through promotions to stimulate sales.

       Considering by area, it was found that inner Bangkok covering areas like Ploenchit-Chidlom, Silom-Sathorn, and Sukhumvit has 68 completed condominium projects still for sale. This area has high potential, resulting in land prices increasing continuously at an average of 10% per year, pushing condominium prices higher and allowing for good rental opportunities among working professionals and foreigners, with rental rates ranging from 20,000 to 35,000 Baht per month, yielding an average rental return of 4.0%.

       In the mid-Bangkok area, covering Rama 3, Phaya Thai, Victory Monument, Sapan Khwai, Chatuchak, Ladprao, and Ratchada, there are 60 completed condominium projects. This zone shows clear growth trends, with convenient transportation, restaurants, and job opportunities, yielding an average rental return of 3.3%. Projects with higher returns are those located within 500 meters of the BTS stations.

       Of the completed projects, over 45% are located in the Ladprao-Chokchai 4 and Ratchada-Rama 9 areas, with rental rates between 13,000 and 20,000 Baht per month, yielding an average rental return of 2.7%. The opening of the extended Green Line BTS has significantly transformed Ladprao, while in Ratchada-Rama 9, various real estate developments, including office buildings, shopping centers, and residences for foreigners, have emerged, yielding an average rental return of 4.5%.

       The outer Bangkok or suburban areas have the highest cumulative supply of completed units, around 70%, with 127 completed condominium projects, yielding an average rental return of 4.1%. Most of the supply is priced below 75,000 Baht per square meter. When comparing condominiums in outer Bangkok located 400-500 meters from BTS stations with those in the city, it was found that they are 30-40% cheaper than city condominiums, resulting in relatively high rental returns compared to other areas, with most rental rates ranging from 6,500 to 8,500 Baht.

“Although this is not a bustling year for the real estate market, it is an interesting year for investors who are ready and focus on medium to long-term investments. This is a great opportunity to purchase real estate at lower prices, with the potential for valuable returns both in terms of future price appreciation and rental income from areas that still have growth potential. Additionally, when choosing to invest in condominiums in each location, one should consider the location, supply trends, area potential, and purchasing power entering the area. We are starting to see price reductions in some projects in outer Bangkok that are now priced below their initial sale prices to stimulate sales. However, investments should also consider the amount of new supply expected in the future, growth potential in the area, and consumer purchasing power. If an area has excessive supply while demand remains limited, it could affect price levels and potential returns.”

 

Source: Plus Property Co., Ltd.