The condominium market in the Rama IX area has growth potential because of the intersection of two mass transit lines and strong demand from Chinese buying for their own use and for investment, says property analyst Surachet Kongcheep.
The Rama IX area will continue to be one of the most attractive locations, he said, as the government plans to build the Orange Line from Thailand Cultural Centre to Min Buri, a route that interchanges with the MRT subway at Rama IX Road.
“New office supply at this location will be limited because land prices are so high that the development of new office buildings may not be feasible or worth the investment,” Mr. Surachet said.
Condominium supply will continue expanding in locations along Ratchadaphisek Road rather than Rama IX Road as the latter has less potential. But the amount of new supply will likely be limited when compared with other locations along with new mass transit lines.
“Rama IX-Ratchadaphisek is one of the locations in Bangkok where there is a large number of foreign buyers, particularly Chinese who are keen to buy a Bangkok condo unit for either their own use or an investment,” Mr Surachet said.
He said the area from the Rama IX intersection to Thailand Cultural Centre MRT is called the new central business district (CBD), but it is more accurate to call it a CBD extension as office supply totals only 405,000 square meters.
“New office supply completed and added to the market the past four years was located along Ratchadaphisek Road from the Rama IX intersection to the Thailand Cultural Centre MRT station as land prices in the traditional CBDs were not worth the investment for rental offices,” said Mr Surachet.
Many office buildings around the Rama IX intersection or within a radius of one kilometer were a key factor driving new condominium supply during the past several years. A big expansion took place in 2012 and a bigger one in 2017.
In 2017, the number of new condos launched in the Rama IX area totaled 2,848 units. The outstanding number of condos at this location totaled 14,917 units, with more than 1,500 units from three projects scheduled for launch this year and next.
The condo sales rate for the area exceeded 85%, which is considered healthy, he said. Some projects partially launched in February and recorded a high sales rate.
Mr Surachet said some new condo projects planned for launch during 2018-19 will have sales prices of more than 250,000 baht per sqm, while the average price at the location is 130,000 baht per sqm, rising 3% per year.
The current CBD locations cover key roads including Silom, Sathon, Rama I, Rama IV, Ratchadamri, Wireless, Lang Suan, Phloenchit and Sukhumvit between sois 1 to 21.
The total area of office buildings for all grades is over 3.48 million sqm.
Most office spaces are at buildings over 10 years old, while new buildings aged less than 10 years had combined office space of only 453,900 sqm, accounting for 13% of the total, he said. The latter are in locations where either the Skytrain or MRT serve.
CBDs are locations where land prices are the highest in Bangkok, continuing to rise during the past several years.
A plot priced lower than 1 million baht per sq wah in a CBD is very rare, said Mr. Surachet.
With the continual rise in land prices, there have been no new office buildings on freehold plots, only leasehold plots.