Buyers’ market in Bangkok
By Hailey Yu
/ EdgeProp Singapore |
Swimming pool at The Esse (Credit: Singha Estate and Hongkong Land)
SINGAPORE (EDGEPROP) - In Thailand, the Thonglor area in the capital city of Bangkok is known for its lifestyle amenities, from hipster cafés, fine dining restaurants and bars, to trendy malls, fitness clubs, aesthetic clinics and private hospitals. Over the years, it has become a sought-after location both for locals and expats such as the Japanese, Korean, Chinese and British. The area has also become more accessible with the opening of the Thonglor BTS sky train station on the Sukhumvit Line in 1999.
Standing head and shoulders above the other luxury residential towers in the Thonglor area is the 43-storey The Esse Sukhumvit 36 (The Esse), located along the prime Sukhumvit Road, just a few steps from the Thonglor BTS sky train station. Jointly developed by two renowned property developers — Thai public-listed Singha Estate and Hong Kong-listed Hongkong Land —The Esse is a freehold luxury condominium with 338 units.
The Esse is designed by international architectural firm SOM (Skidmore, Owings & Merrill), whose projects include some of the world’s tallest skyscrapers such as Burj Khalifa in Dubai, Jin Mao Tower in Shanghai, One World Trade Centre in New York, and Guoco Tower in Singapore (at 290m, it is the tallest tower in Singapore).
Bedroom interior (Credit: Singha Estate and Hongkong Land)
Completed in late 2020, about 75% of the units at The Esse have been sold, with Thais accounting for 70% of the buyers, and international buyers making up the remaining 30%.
Facilities in the condominium include a gym, infinity pool, landscaped outdoor terraces and roof gardens. The Esse also features the largest Japanese onsen spa in a condominium — with separate men and women spas, and two different types of onsens. The developer has also installed Swiss-manufactured medical-grade IQAir air purifiers in the public spaces to provide protection against airborne pollutants.
Luxury residences in the Thonglor area are generally priced in the range of THB300,000 psm ($11,301 psm or $1,050 psf) to THB380,000 psm ($14,315 psm or $1,330 psf). The average asking price at The Esse is THB330,000 psm ($12,540 psm or $1,165 psf).
Since the pandemic, there has been greater demand for larger apartments. The sole 2,713 sq ft penthouse at The Esse is already taken up and 16 of the 18 three-bedroom apartments (1,257 to 1,337 sq ft) are sold to date.
However, international buyers who are buying apartments for investment or as a holiday home still prefer one- and two-bedroom apartments, according to a spokeswoman for the joint-venture partners of The Esse. At the development, one-bedroom apartments range from 414 to 466 sq ft, while two-bedroom apartments are from 791 to 829 sq ft.
The developers are allowing payment via cryptocurrency on the Genesis Block, a leading OTC trading centre for digital assets in Hong Kong. So far, no one has used cryptocurrency to pay for an apartment, according to the spokeswoman. “They still trust in, and prefer the Thai currency,” she adds.
Due to China’s zero-Covid strategy, there has been an absence of Chinese buyers at the top end of the luxury condo market. However, some demand from Chinese buyers has returned “through agents recently”, according to the spokeswoman.
Prime condo supply, demand and vacancy rate (Source: JLL Research, Thailand)
Indeed, the luxury condo market in Bangkok has partially recovered on the back of investor demand, particularly for buy-to-let properties, says Jeremy O’Sullivan, JLL head of research Thailand, in a 1Q2022 market update.
Demand from high-net-worth individuals increased at the end of last year due to significant discounts given but tapered off in 1Q2022. Unsold market inventory has declined to 4.8%, with 3,300 unsold units.
Average asking prices (JLL Research, Thailand)
This is because new supply of luxury condominiums was scarce, with the 756-unit 125 Sathorn being the sole new launch in 1Q2022, according to JLL Thailand Research. “Due to the uncertainty regarding the pandemic, paused projects remained inactive,” says O’Sullivan. “Furthermore, no new apartments were added for two consecutive quarters.”
The condominium stock climbed marginally to 69,500 units with the completions of Four Seasons Private Residences Bangkok (355 units) and The Strand Thonglor (198 units) in 1Q022, bringing the number of available apartments to 4,700 units. The completion of these new top-tier projects led to a 2.4% rise in capital values, says JLL Research.
More luxury condo projects are expected to be launched towards the end of 2022, including branded residences and the relaunch of projects that had been put on hold. “However, the pandemic and the Russia-Ukraine war are significant concerns that could affect both the overall economy and residential market,” cautions O’Sullivan of JLL.
Source: JLL Thailand Research
Rental demand decreased in 1Q2022 due to a lack of new tenants and tightening budgets, according to JLL. The rental market is expected to continue maintaining a “wait-and-see” mindset in anticipation of significant improvement in the latter half of 2022. Owners of buy-to-let units were compelled to provide big discounts to keep their tenants. Additionally, the new property tax implemented in Thailand resulted in a 2.6% q-o-q decline in condominium net effective rent to THB466 psm per month, notes JLL.
While activity in the overall Bangkok condominium market is expected to pick up, most of the new project launches are targeting local end-users and are therefore focused on the midtown and suburban areas, says CBRE Research in its 1Q2022 report. “The downtown market is more reliant on investors as well as end-users,” says CBRE. “Also, more recently, foreigner buyers have played an important role in this market.”
Newly completed condos (Source: CBRE Research, Thailand)
Over the next 12 months, a total of 4,500 units are scheduled to be completed throughout Bangkok’s central business area, according to JLL Research. With the majority scheduled for completion by the end of the year, and hardly any being completed in early 2023, JLL anticipates a higher pre-sale rate than the current 57.4%.
The supply of upscale residences is still limited, says the spokeswoman for the joint-venture partners of The Esse. Hence, The Esse stands out from other luxury condos based on its amenities, location in Thonglor next to the BTS skytrain station and its design by SOM, she adds. What’s more, it is newly completed and in move-in condition.
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