A summary of 2018…
As someone who has been dealing with Bangkok properties since 2013, 2018 has turned out, in my personal opinion, to be a year in which the Bangkok property market matured the most in perhaps the last decade. Foreign buyers used to think that Bangkok properties were cheap as compared to their home countries. This is especially so for people from China, Hong Kong and Singapore. However, property prices have been steadily growing in the past few years, fueled by foreign investment and a strong economy. Prices are significantly higher than it was five years ago and there is a growing realisation that Bangkok as a tourist and investment destination is no longer as cheap as it once was. In fact, in a recent report in early December 2018 by Employment Conditions Abroad (ECA) International, Bangkok joined the list of the 100 most expensive cities for expatriate workers for the very first time. In the past five years, Bangkok has climbed more than 80 places and now currently sits in 90th place. It climbed 32 places from 2017 to 2018, highlighting the rising cost of living that comes with a growing economy and a population that is embracing globalisation and it’s new found importance in China’s One Belt One Road initiative in South East Asia.
A brief understanding of Bangkok’s property market would put investors in a better position when looking at condominiums. In the past 15 years, property developers have matured from a position whereby they were adopting technology and construction methods by partnering foreign developers to one where Thai developers are starting to innovate and come up with creative condominium concepts and develop quality developments. In fact, the quality of some of the developments in Bangkok is one of the highest in the world. In fact, properties like Sansiri’s 98 Wireless have been featured in CNN describing how meticulous the development is in curating the best materials for the development. The cost for a two-bedroom in 98 Wireless will set you back more than USD$3 million.
Local demand for Bangkok properties is also very strong. There is a limit to the number of units in each condominium that can be sold to foreigners and that limit is 49 per cent of aggregate floor space. For properties in very good locations, this foreign quota is rarely hit. In fact, many Thais have taken to property investment to keep up with inflation and those who have gotten in the game earlier in the decade would have made rather handsome profits if they were to sell their properties in 2018. There is a fallacy within foreign buyers that local demand is weak when the truth is the exact opposite. Local demand is only weak for developments that are located far away from the city centres or popular residential districts. Foreign buyers must learn to understand the local Bangkok property market before investing. 2018 was a year whereby Thai developers went on a charm offensive in places like Hong Kong, China and Singapore among many others and marketed their entire portfolio to foreigners. Most of these offerings were located in the heart of Bangkok and have genuine demand but too often has there been cases whereby the properties sold to foreigners were located in an obscure location with little to no rental or resale demand.
My top 5 new project launches in Bangkok for 2018
As this is a countdown, let’s start with number 5. I rate the new project launches based on location, quality, price and potential for appreciation.
Siamese Asset may not be synonymous with property investors outside of Bangkok but they are making an impact in the Bangkok property market. One of the main reasons why I am personally attracted to developments by Siamese Asset is because of the good quality finishing that they provide as well as the large number of items that they provide as developer standard material. To most property buyers, walking into a sales gallery with a mocked-up unit would mean trying to discount all the interior design work which the developer put into the sales gallery. Siamese Asset provides things like a ready built-in shoe cabinet, a wall mounted television console, a foldable wall mounted dining table or wall mounted custom-made bookshelves for the walkway to the bedrooms. Siamese Exclusive Queens is a 33-storey development with 332 units. It is about 50 metres from Queen Sirikit MRT Station which is one station away from Sukhumvit MRT where you can hop onto the Asok BTS on the Sukhumvit BTS line. There can be no nearer development to the MRT station as this is as close as you can get. At the same time, units do not get the road noise from the ever-busy Rama 3 road as there is a setback from the road. It is also 3 MRT stations away from Silom MRT. Just across the road is the Queen Sirikit National Convention Centre where major fairs and expos are held. Some units have a majestic view that overlooks the Benchakiti Park. Unfortunately, all units in Siamese Exclusive Queens have been sold out since mid-2018. They have other developments with a very small handful of units left in Siamese Exclusive 42 and Siamese Exclusive 87, in Ekkamai and On Nut respectively, with the same good quality finishing.
For those who are familiar with this place called Arena 10 in Thong Lor Soi 10, well this is it. Origin Property bought over the site of Arena 10 and will develop Park Origin Thonglor on this very site. The football pitch has been cleared and famous bars and restaurants like The Locker Room and Ping’s Restaurant have been made to relocate to make way for the sales gallery. There are still some night spots operating behind the sales gallery but these will also have to make way once development work on Park Origin Thonglor commences. This is how the property scene is like in central Bangkok. Developers are starved for land and have to pay out landowners and displace existing businesses to purchase prime land. Unlike cities like Singapore and Hong Kong, the Thai government does not have an adequate land bank to release to developers. Developers have to obtain prime land from the resale market. Thong Lor Soi 10 has a lot going for it. This is right in the heart of Thong Lor where the affluent locals and expatriate community congregate. The area is littered with high-end community malls, bars, restaurants and hotels. There is a Donki Mall opening just a stone’s throw from Park Origin Thonglor and in future, there will be a train station along the grey line called Thong Lor 10 which would most probably mean that the future station should not be too far off from here. The development will be managed by Intercontinental Hotels Group just like their previous development Park Origin Phayathai.
The area around The EMQuartier is one of the priciest neighbourhoods in Bangkok. Properties located along the main Sukhumvit Road next to Phrom Phong BTS can command prices in excess of USD$1 million or over THB 30 million for a 2 bedroom apartment. Noble State 39 is located along Sukhumvit Soi 39 which is the soi or lane next to The EMQuartier. This particular street is noticeably wider than the usual sois and is flanked by high-end luxury apartments. Noble State 39 is located within the soi just after all the luxury high-end condominiums. The quality is also very high as it has to keep up with the neighbourhood but because this development is not targeting the luxury buyer but rather the savvy property investor, it is priced more affordable and has one bedroom units that go for about USD$250,000 onwards. Of the five developments on my top five list, this development is located in arguably the most upmarket neighbourhood of the five. It would be wise to note that luxury developments usually do not have one bedroom units and thus having a one bedroom unit at Noble State 39 might be a smart investment as it would cater to a market that was not prevalent in this area.
Maru Ekkamai 2 by Major Development
Ekkamai is a very popular area for expatriate tenants. There is a sizable Japanese community in this area and it is evident in a large number of Japanese restaurants, bars and cafes in this area. Maru Ekkamai 2 was extremely popular because it promised good quality finishing and had a very unique loft concept which is turning out to be very popular with property buyers and tenants. Loft units tend to feel larger and more welcoming than traditional units. Maru Ekkamai is developed by Major Development which has consistently been handing over good quality developments to their buyers. As reputations precede themselves, Maru Ekkamai 2 is already sold out. Major Development has had a good 2018. Its other offering, the pet-friendly Maru Ladprao, was also well received and was sold out not too long after it was launched. This developer has made a knack of coming up with innovative developments to cater to niche segments and their developments are usually located close to a train station.
Let me start first by saying that XT Phayathai is not the nearest new development in the Phayathai area to Phayathai BTS. Park Origin Phayathai is closer. However, there are units in Park Origin Phayathai that are going for more than THB 350,000 per square metre. In contrast, you can get a unit at XT Phayathai for about half that per square metre price of about THB 175,000 per square metre. For those of you that are unfamiliar with Phayathai, Phayathai BTS is just two stops away from Siam BTS. This area houses a lot of offices and government agency buildings. If you are in the market for a property in Phayathai, Park Origin Phayathai might impress you at first. That particular development is designed by world-renowned architectural firm Ong and Ong, is an integrated development with offices, commercial space and a hotel run by Intercontinental Hotel Group (IHG). In fact, Park Origin Phayathai will be managed by IHG as well. This is the reason why the take-up rate for Park Origin Phayathai is so strong. Sales in Mainland China and Hong Kong were extremely brisk. However, after careful consideration, XT Phayathai is just an additional 2 to 3 minutes walk from Phayathai BTS, is developed by Sansiri, one of Thailand’s leading developer with a strong international presence in Mainland China, Hong Kong and Singapore and has extremely innovative condominium facilities. Once you purchase a Sansiri development, you become a Sansiri family member and will be entitled to use the Sansiri lounge at Siam Paragon. Moreover, XT Phayathai is part of the XT series of condominiums by Sansiri. The other two are XT Huai Khwang and XT Ekkamai. The concept for the XT series of condominiums is that the developments will have some shared common facilities like co-working spaces or meeting areas. As an owner of XT Phayathai, you could visit XT Huai Khwang and XT Ekkamai and use the shared facilities there as well and vice versa. The target market for the XT series is the millennials and the condominiums have fancy facilities like treadmills that can mimic the terrain in the forest. In my previous article about the up and coming property investment locations in Bangkok, I spoke about Phayathai being the intersection of 3 train lines and it having easy access to the Bang Sue grand station which would eventually have train lines leading to Kunming, China. The potential for the Phayathai area is immense. This coupled with a decent entry price for a Sansiri product is what makes me rate XT Phayathai so highly.
This just missed out on my top 5 for the year by a hair’s breadth. On Nut is just two BTS stations away from Ekkamai and is turning out to be a very popular residential area for both locals and foreigners. For one, there is a massive Tesco just next to the BTS station and on the other side of the station is a large shopping mall, Century Plaza. Chambers On Nut is barely a five-minute walk from On Nut BTS and is developed by SC Asset, one of the better developers in Bangkok in terms of quality. The selling point? The price and the location. This is perhaps one of the few new developments you can get in Bangkok for about THB 3 million for a one bedder.
Kawa Haus is located in the T77 Community, a guarded and gated community by Sansiri. The landscaping, roads and the overall upkeep of the T77 Community are very good. Kawa Haus consists of 3 low rise buildings with 7 floors each and has a total of 546 units. The popular Habito Mall is located in T77 and there is also a dental hospital and Bangkok Prep School. The environment is so organised and neat that you will be forgiven for forgetting that you are in Bangkok when you are in T77. Occupancy rates are high in this area because of the pleasant community. Kawa Haus is the last residential development in T77.
Best Quality Development
I have spoken on countless occasions about buyers having to go through what is provided by the developer. This is the same for properties bought anywhere in the world. You can come from China, Hong Kong, Singapore or Malaysia, the show flat which you walk into is going to be a far cry from what you will eventually be getting. This, however, is different when it comes to Siamese Asset’s offerings. Siamese Exclusive 42 is a 32 level development with 450 units located just behind Gateway Ekkamai which is next to Ekkamai BTS. Many items in the show flat are provided as developer standard material. The developer labels these items in the show flat and I was pleasantly surprised that even items like a display cabinet in the living room are provided for.
Most Innovative Development
This is the development that I feel has come up with something refreshing and new in a property market saturated with new offerings.
The XT Series by Sansiri Public Listed Development
The XT series, namely XT Ekkamai, XT Huai Khwang and XT Phayathai are part of a very unique and special concept by Sansiri. Residents of one XT condominium can have access to the co-sharing facilities in the other developments in the XT series. Moreover, these developments have gyms with rock climbing walls that run like treadmills to simulate continuous climbing, treadmills that move to simulate outdoor terrain and active fitness stations. I personally find it difficult to narrate these facilities in writing. In a nutshell, they are impressive.
Park Origin Phayathai by Origin Property is a 33 level development with 550 units. The architect is a world-renowned Singapore architectural firm Ong and Ong and they have come up with a very special building that will aim to be a landmark in Phayathai. There is a 33 level vertical climb along the exterior of the building. Along the way, the trail is punctuated by various fitness activities and the route is decked out in greenery. The project is part of an integrated development with offices, commercial space and a hotel run by Intercontinental Hotel Group (IHG). IHG will also manage Park Origin Phayathai.
Developments with the most potential
Maru Ladprao 15 is located about a minute’s walk to Ladprao MRT Station. Ladprao MRT will be the future interchange between the blue and upcoming yellow train line. The development is also pet-friendly and this is a large draw for tenants who relocate to Bangkok and are bringing their pets along. Not many know this but perhaps 95 per cent or more of condominiums in Bangkok are not pet friendly. Major Development has identified a gap in the market and they have filled the gap appropriately. Good location with loads of potential and pet-friendly status contributed to the development selling out pretty quickly.
This development is located in the Sathorn Financial District. It is close to Chong Nonsi BTS Station and from the station, you can walk over to Sathorn BRT station and take the BRT service to the development. It is at Akhan Songkhro station which is one stop away from Sathorn. BRT is a bus service with a dedicated bus lane whereby only busses on the BRT network can use that road. It is like travelling in Sathorn on a bus with no traffic. In future, there will be a station, BMA Narathiwas, next on the grey train line that is slated to be built close to Knightsbridge Prime Sathorn. In my personal opinion, all the top corporate offices are still in Sathorn and they will continue to remain there.
Looking ahead to 2019…
Local demand for good properties is strong and household debt is increasing. In fact, it is rather common to hear of locals buying multiple properties because of the liberal bank lending criteria in Thailand. In many cases, local buyers can finance more than 90 per cent of the property purchase price. As local demand for mortgages is extremely healthy, a large chunk of Thai banks’ business is in local mortgage lending. Perhaps this explains why Thai banks have been rather reluctant to cater to the foreign market since the local demand is strong and issuing a loan to a local is much easier than issuing one to a foreigner. Almost half of new mortgages in the second quarter of 2018 had a loan-to-value (LTV) of more than 90 per cent and those with a loan-to-income (LTI) ratio of above five times made up nearly one-third of buyers. This deteriorating credit standard is a huge concern for the Bank of Thailand and they have stepped in to regulate the local lending market. The Bank of Thailand is aware of the systemic risk of having too much household debt and has implemented a new rule which requires lenders who buy a second home to make a down payment of at least 20 per cent of the value in order to qualify for a mortgage exceeding 10 million baht. Lenders will also not be allowed to provide advances that exceed the value of the property. This ruling will take effect in January 2019. This should impact the local demand for mortgages and properties although the exact impact is difficult to estimate. One thing is for sure, come 2019, the foreign market will be more important to Thai developers. The largest Thai developers like Pruksa and Supalai have hardly made their presence felt outside of Thailand. In fact, the developers that are aggressive in the foreign market are not the top developers in Thailand in terms of market capitalisation on the Stock Exchange of Thailand. I do think that after this ruling, foreign buyers of Bangkok properties will become more important to just about all Thai developers. This can be a double-edged sword. On one hand, foreign developers may extend special deals to foreign buyers and may be more accommodating and offer better payment terms to entice these buyers. On the other hand, they may end up trying to offload properties that were not intended for the foreign market to foreigners due to the possible slowdown in the local demand because of the new loan to value limits for locals. My take to foreigners looking to invest in Bangkok properties, do your homework, understand the investment terrain and engage experienced professionals who are familiar with the Bangkok property market.
Barring a global recession, I still feel that Bangkok property sales will be brisk although demand should not be as strong as the early part of 2018. In my view, the elections in the early part of 2019 should move along smoothly. The Thais have seen the benefits of a stable political climate and the general public should be wise not to disrupt this equilibrium. The Bangsue grand station is taking shape and construction is moving along nicely and Bangkok’s eventual goal of becoming the transportation hub of ASEAN should materialise in the near future. Extensions to the current BTS lines have just opened and more lines will progressively follow suit. Bangkok’s rail network will be expanded greatly and this can only benefit commerce and trade within the city. The main investors in Bangkok are still the Chinese and as the baht is expected to strengthen on the back of a strong economy and stable politics, Bangkok will be seen by many as a safe haven to park their monies.
p.s. I run a property company in Bangkok as well as run a property portal, Invest Bangkok Property which also has a YouTube Channel. My views and reviews are my personal independent views and are a result of my dealings with various developers and the various stakeholders in the Bangkok property market. I blog about the Bangkok and Singapore property market in my own personal capacity.
My other articles about Thailand property
Here is my review of the Singapore Property Market