Condominium owners are in for a good surprise! The general high-rise residential market in Bangkok has improved. Since political tensions in 2010 have subsided, the Bangkok real estate market is now back on track. Potential buyers are more than eager to shop around and scout for the best deals in the market. Likewise, condominium owners are excited to know how much value their properties have right now.
Bangkok Condo Finder observes that average residential property yields have remained stable above four percent since 2004. This year, we are expecting another strong phase for condominium launches in the city where high-rise prices remained steady in the 2009-2010 period. With an average selling price today of 110,000 baht per sq. m. for Grade A and Grade B units in the city area last year, strong yields in the premium and peripheral categories prevail.
If you’ve bought a condo in 2009 and would want to know how much you’re currently making on your condo investment, here are the stats:
Premium properties or units located in the Central Business District (CBD), along the Chao Phraya River and in Sukhumvit have an average yield of 5.48 percent in 2010, down from 5.60 percent a year before. Year-over-year (YoY) changes posted the strongest gain in 4Q10 with 8 percent. From January to September, quarter-over-quarter (QoQ) change remained below 2 percent before recovering to 7 percent.
On average, a high-end unit worth 168,000 baht by the end of 2009 has gained around 800 baht a year after, holding all operating and capital costs constant.
On the other hand, Grade A units in the same areas finished the year with stronger yields at 6 percent YoY versus Grade B units with only 0.04 percent. However, Grade A units’ annual average yield fell by 0.10 percent whereas Grade B units’ yield drop was more stable at 0.08 percent.
On average though, a Grade A unit worth 121,000 baht at the time of purchase in 2009 has already gained 424 baht by the end of 2010. In contrast, a Grade B condo valued at 84,600 bath has gained only 75 baht, holding all costs constant.
City fringe areas which include Phahonyothin and Ratchada-Ladprao (those close to the CBD), have Grade B units with a steady annual average yield at 4.63 percent. Grade C units on the other hand have improved average annual yield at 4.75 percent compared to 4.63 percent in 2009. It must be noted that Grade C units have maintained positive QoQ rates in 2010.
A comparison of Grade B units purchased by the end of 2009 has a reduced yield of about 400 baht for a 75,000 baht unit by the end of 2010. In contrast, a Grade C condo worth 41,300 baht yielded 275 Baht YoY, holding all costs constant.
Finally, peripheral areas which include Thonburi, Chaengwattana, Srinakarin, Petchkasem and Kaset-Navamin among others have reduced yields in 2010. Grade B units skidded to 3.88 percent from 4.23 percent annual average the previous year. Grade B units dropped to 3.65 percent from 3.95 percent a year ago. Both types of condominium units experienced negative YoY changes since 2Q10.
Year-over-year comparisons indicate that Grade B condos valued at 74,200 baht have a reduced yield of about 188 Baht while Grade C condos worth 40,300 Baht have also lowered by 107 Baht, holding all costs constant.
This does not mean that condos in the periphery of the city are not worth investing in. Rental units have become cheaper and are already at par with a monthly mortgage for a condo unit in these areas. As it turns out, most renters have opted to purchase one- or two-bedroom units instead, driving total local demand by almost 80 percent.
Real estate investors are more than thrilled with their purchase when property developments along mass transit lines have mushroomed all over Bangkok. More so, an augmented number of young urban professionals in the city fuel the real estate market.
Bangkok Condo Finder forecasts this strong momentum to linger throughout the year as the general real estate trends in the property market is on an upbeat across the Southeast Asian region.