Industrial News

Although the amount of publicly available information about the Thai property market has increased, it is still limited compared to other countries. For example, in the UK and Australia, it is possible to find the details of all recent sales, including prices, street by street. The limited amount of information available in Thailand makes forecasting market trends difficult for developers.

In this property cycle, property developers both local and international have become more sophisticated. Developers are seeking to create projects with unique selling points, differentiating their projects from those of their competitors.

According to the latest survey by CB Richard Ellis Research team, there will be increased competition in some property sectors. For example, as of the first quarter of 2006, there are about 16,000 condominium projects being marketed in Bangkok’s downtown areas targeted to be completed in 2006-2008. Supply of serviced apartments will increase by about 3,400 units in the next three years, accounting for 42% of the total existing stock. There will also be 5,372 new 4-5 star hotel rooms completed in 2006-2008, representing a 36% increase in the current stock.

Looking at the demand side, buyers are more discerning about property purchases. The key for developers is to find areas where this demand can be satisfied profitably.
The Met condominium on Sathorn Road and Emporio Place on Sukhumvit Soi 24 are examples of successfully launched luxury Bangkok condominium (http://www.cbre.co.th/CBRECONTENT/BANGKOK/TRANSACTION_SERVICES/RESIDENTIAL_SALES.HTM?WT.mc_id=10013) projects.

The publicly listed development companies LPN and Supalai have been successful creating developments that appeal to a new generation of urban Thais who want to purchase affordable condominium units in Bangkok’s central areas.

The demand for affordable condominium units is an example of new demand that did not exist ten years ago. Buyers are part of the “skytrain generation” who work in the city centre and, for convenience, wish to live close to work rather than with their parents in the suburbs.

Although serviced apartment supply increased by almost 2,000 units in the past few years, projects such as Centre Point Thonglor have achieved high occupancy and rates.

CB Richard Ellis believes that the key to the success of these developers and developments has been in-depth market research.

In a market with limited publicly available information, only those companies actively involved in each property sector can provide accurate information on demand trends and preferences.

“With higher competition in the property market, developers are looking for opportunities to develop new projects that have unique selling points, they need accurate data to make informed decisions. Lenders also need to have best market data in order to decide on project funding,” commented Mr. Annop Sangprasit, Executive Director - Head of Research & Consulting Services at CB Richard Ellis (Thailand) Co. Ltd.

Other key elements for successful research are historical and regularly updated databases, specialist teams who possess high analytical skills and good knowledge of property-related matters such as laws, regulations, government policies, and future infrastructure.

“A good research study should contain analysis on location, appropriate use of the site, peer competitors, long-term competitiveness of the site, current and future market situation, marketability, and factors affecting buyers’ decision making. The study should also be able to recommend potential target groups, development concepts, area allocation, unit mix, specifications, project’s selling points, marketing strategies, pricing, and returns on investment,” added Mr. Annop.

The property market is different from the market for many other products because of time delay between reacting to an increase in demand and completing the project. This is why both developers and lenders need the best information available in order to avoid a repetition of the situation in the 1990’s.

As the property market grows, good quality research becomes increasingly important. Without property research based on real market data, there will be a significant risk in new property development.

CB Richard Ellis believes that quality market research will not only benefit developers in terms of successful sales performance and lower development risks, but it will also benefit property buyers in terms of availability of higher quality products, resulting in sustainable market growth.