Best real estate in Thailand

The luxury sector of the condominium market is seeing a significant change with buildings that are nearing completion attracting Thai empty-nesters. These are people whose children have grown up, married and left home, and who want the convenience of a city-centre location, says James Pitchon, executive director of CB Richard Ellis.

In the past few years the overall condo market has been partly driven by the demands of the Skytrain generation _ young adults who have recently completed their education and have a secure job _ who zeroed in on small studio and one-bedroom units in prime locations near the train stations to live in.

However, empty-nesters are at the other end of the age group, they are not retirees but are around 45 years and upward. They don't want to live in the big family house anymore because there are only the two of them left, with the children having moved on. So we are seeing that they want quality, they want larger units because they have been used to living in the big house and these people are willing to spend 20-25 million baht, says Mr Pitchon.

The condominium size that appeals to well-off empty-nesters is around 200 to 250 square metres. Mr Pitchon notes that they also conservatively prefer to buy a unit in a building close to completion rather than off plan because they want to see the finished product and can afford to pay a premium price.

While many buildings are positioned in the luxury sector, a careful study will show that there are actually not many that really make the grade. CB Richard Ellis's director noted that many projects boast that they are achieving more than 100,000 baht a square metre but in actual fact not every unit is sold at that price.

The best current example of a truly luxurious building that is due to be completed later this year is probably the Ath?n?e Residence with achieved prices on resale units between 120,000 and 140,000 baht a square metre, roughly a 20% increase since the launch.

Others in the top bracket include Hansar Residence which is located in Mahadlek Luang Soi 2 right behind Four Seasons Hotel and consisting of 196 units. As it is located on Privy Purse land, these units are available on 30-year leases. The Met condominium on Sathon Road has also been selling very well recently with prices up to 120,000 to 150,000 baht a square metre, which again are 20% higher than at the launch.

The Millennium in Sukhumvit Soi 18 continues to attract buyers as well and is seeing steady sales with minimum advertising. Mr Pitchon noted that to really qualify for the luxury category, it takes the right combination of design and location. It seems that high-rise is still what people prefer, people want to be high up, unless it's very low density on a very large plot of land.

But a great location alone will not ensure success because an average project on a good city-centre plot can still fail chiefly because residential development is a far more complicated undertaking. Among the factors one has to get right is exclusivity _ 600 units in one tower probably is not going to be seen as very exclusive.

It's not just location people say 'location, location, location' but I disagree with that for residential property, particularly in the luxury sector, it's not a commodity and your design must stand out and also the specification.

Mr Pitchon added that it's not necessary for a residential building to be on the main road because of the noise. And the second thing, there are plenty of examples of buildings in Bangkok. You have two buildings may be only 50 metres apart and one building will be getting prices that are 40-50% higher than the other _ that comes down to design and property management.

The next new trend for Bangkok's condo market is a branded product that is not just a name but developed and managed by a hotel. Mr Pitchon points out that The Sukhothai, managed by the deluxe hotel of the same name, will be the first in the city. As property management has always been a challenge, it gives people great comfort that a premium hotel will manage their building.

On the general outlook for the Thai property market Mr Pitchon said his standard response is that the market is like an oil tanker, something that takes a long time to manoeuvre in any given direction. It's not similar to the stock market, which moves up and down in reaction to news or sentiment.

Certainly the mood in Thailand has been a lot more positive in the last month, we hope that will continue, he said. I think the most positive factor is that we are starting to see some local buyers, end-users in our luxury sector.

Condominium purchases by foreigners have been consistent though, and many want to live in their unit for all or part of the year because Bangkok still offers a great combination of quality of life compared to cost of living, whether that is health care or fine dining, or the cost of maids and drivers.

Many expatriates work in Hong Kong and Singapore prefer to retire in Thailand because the cost of living is so steep in the other two locations.

Mr Pitchon also noted that aside from the expatriate market, the Asian market is also opening up with Korean nationals now being allowed to own property overseas. So we have seen an increase in demand from Koreans.

This article was first published in The Bangkok Post 10th July 2007