Chinese buying trends still strongly boost residential market: Savills Thailand

By Nina Suebsukcharoen

THE Thai residential market is still being strongly reinforced through Chinese buying trends that added quite significant value all of last year with Thai buying too remaining reasonably consistent in all sectors, Mr. Robert Collins, CEO of Savills Thailand said in an exclusive interview on Tuesday (Mar. 5).

While Mainland Chinese have historically been buying condominiums in the Rama 9 road area, typically looking for foreign quota of residential buildings around there, a definitive shift occurred last year towards buying luxury premium grade downtown properties.

Should the Chinese buying trends continue it will lead to branded residential developments increasing in the downtown area especially around Lumpini Park where there are developments starting to ring it on three sides – Sarasin, Rama 4 and Wireless roads.

“This is a really significant trend that will become apparent once developments start to complete. We see similarities to Hyde Park in London and perhaps Central Park in New York,” he said.

The increased demand is pushing values in the absolute top tier towards 1 million baht per square metre.

“That’s where the market is headed on its current trajectory,” Mr. Collins said.

However it is not just the premium luxury residential sector that is pushing the property market ahead with domestic buying remaining reasonably consistent last year and continuing this year.

“The residential trend for downsizing rooms to absolute tiny sizes possibly simply because it makes entry point much more affordable to a wider audience – that seems to have abated and we see a better degree of normality coming to play on that side which I think is very good for the market,” he said.

There is also a resurgence of new developments along the river on Rama 3 road which is positive for the market and should be reinforced by the BTS Skytrain reach there in future.

However, ideally there should be a bit of a slowdown from developers as there are signs that the market is reaching saturation point, he said, adding this is not just in residential but also very much in the office sector where new supply of office buildings is certainly beyond what the market can bear.

While there is demand from companies to upgrade to newer buildings that are definitely providing a better experience for the occupier, the older buildings still remain and have the ability to retrofit into better versions than what was there perhaps in the 1990s.

Upon turning into a modern grade office building, the older ones are able to offer significantly cheaper rentals than the new supply partly because these buildings are fully paid for and are not carrying debt,

“I think one of the big trends on the commercial side is that older buildings tend to have more generous parking provision than the new office buildings, and this also applies to the residential sector.

“It is very apparent in terms of mechanical parking – most people drive their own car, whether at home or going to work and they would much rather park in a proper parking space than rely on mechanical parking system,” Mr. Collins said.

“There are some new office buildings that are putting very heavy reliance on mechanical parking, which is a new technology and yet to be borne out whether this is a practical way forward.

“And I think it’s premature to assume that people will be using cars less, I don’t think there is much evidence of that.”

Savills Thailand’s boss also mentioned Bangna area which has gone through many cycles over the decades in terms of popularity swings, but shining there is Mega Bangna which is a very successful retail development that is well designed and has worked.

Again the big factor there is the complex’s huge parking lots that ensure people who get there can park.

Also being completed is The Forestias mixed-use development by Magnolia Quality Development at kilometre seven of Bangna Trad road with there to be residential zones, retail and office space, a six-star hotel among other facilities.

“It’s quite a busy road, historically more known for warehouses and industrials but there are developments, Bangkok Mall is one of the absolute largest developments in the pipeline,” he said.

“I think Bangna works, there is no avoiding the traffic jam, it’s just part and parcel, but it has a very strong draw for young families looking for housing with garden for raising kids, you have access to very fine international schools,” Mr. Collins said.

CAPTIONS:

Top: High-rises around Lumpini Park by Tino (CC BY 2.0 Deed)

Insert: Developments along Chao Phraya river by Randy Adams (CC BY-SA 2.0 Deed)

Front Page: Lumpini Park skyline by Matt Crampton (CC BY 2.0 Deed)

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