Advance Blog

January 10, 2023
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CBRE: 2022, A Year of Revival for Low-rise Housing

Bangkok – January 9, 2023 CBRE, a leading international property consultant, revealed that after more than a decade of consistent growth in the supply of condominiums in Bangkok, 2022 witnessed the return of low-rise housing as the home of choice for Thai buyers. In 2021 the supply of new low-rise housing exceeded that of the new condominium supply in the Bangkok Metropolitan region for the first time since 2011. In 2022, although the supply of low-rise housing increased by at least 25% compared to 2021, there was also an increase in new condominium supply, especially in midtown and suburban areas, and targeting the “first jobber” market.

The residential market saw strong levels of activity, particularly in the housing sectors, and while most activity in the condominium sector remained focused on the midtown and suburban markets, many developers appeared positive about plans to launch new condominium projects in downtown Bangkok. Despite this optimism, however, confirmed downtown condominium launches have remained limited.

A key feature of the low-rise housing market in 2022 was the increasing number of luxury and super luxury housing projects launched. The impact of the pandemic has boosted demand for larger spaces that have specific functions for new ways of working and living. CBRE Research found that most newly launched luxury and super luxury housing projects in 2022 were concentrated in Eastern Bangkok, primarily along Krungthep Kreetha, Pattanakarn, Srinakarin and Bang Na roads, such as Malton Gates, Aliyah Reserve, Park Heritage, and Nirvana Collection. The luxury and super luxury market has proven resilient during the pandemic, and this year will see even more units for sale in the luxury and above grades, such as Grand Bangkok Boulevard by SC Asset or Narasiri by Sansiri.

This new supply of luxury housing with better design and functionality will make developer-built units more popular. Entry-level low-rise housing projects, especially townhouses, are competing for market share with mid-range grade condominiums in the midtown/suburban area. As land prices have continued to rise, many newly launched midtown condominium projects have asking prices similar to those of townhouse units located not far away. Additionally, the changing lifestyles of home buyers raise questions about the necessity of living in the city.

“Many potential buyers have adapted to new ways of working. They have taken up new hobbies and made plans to start a family; these things require the kind of space a condominium unit generally cannot offer. Buyers are willing to locate themselves further from the city to access the greater living space of low-rise housing, knowing that such homes cost roughly the same as smaller, downtown condominium units,” Ms. Chotika Tungsirisurp, Head of Research and Consulting, CBRE Thailand, stated.

She added “This scenario is also playing out in the luxury housing market in the midtown area, which now competes with high-end and above grade condominium units downtown. Again, while the price point is often similar, the key is that very few condominium developments provide large family sized units, something that developers have addressed in their low-rise housing products.”

In contrast, in the downtown condominium market, developers are cautious about introducing new projects to the market while existing-but-unsold inventory remains, and beyond the competition between low-rise housing and condominiums the downtown market has been seriously impacted by the weakened spending power of buyers together with lower numbers of foreign buyers, especially Chinese. The market continues to be price-sensitive, focusing on domestic buyers.

Ms. Chotika concluded that “Ultimately there remain significant challenges for the residential sector, as the temporary Loan-to-Value (LTV) relaxation measures expired at the end of 2022, and elevated construction costs eat into developer margins. Rising consumer debt levels and the lack of investor demand will continue to impact not only project sales rates, but developer confidence in launching large-scale projects too.

Chotika Tungsirisurp

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