Market Overview Q22020 Condominium Residential Research

Knightfrank.co.th/Research BANGKOK CONDOMINIUM MARKET OVERVIEW Q2 2020

HIGHLIGHTS

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THE ACCUMULATED SUPPLY OF BANGKOK OF THE CONDOMINIUMS LAUNCHED FOR SALE DURING CONDOMINIUMS INCLUDED 633,649 UNITS AT THE END THE SECOND QUARTER OF 2020, 71 PER CENT WERE OF Q2 2020; A GRAND TOTAL OF 4,022 UNITS FROM 7 GRADE C CONDOMINIUM WITH A SELLING PRICE BELOW PROJECTS WERE LAUNCHED DURING Q2 2020. THE 80,000 BAHT PER SQUARE METRE, FOLLOWED BY 29 PER NEW SUPPLY IN Q2 2020 DECREASED BY 73.2 PER CENT, CENT GRADE B CONDOMINIUMS WITH A SELLING PRICE COMPARED WITH THE NEW SUPPLY IN Q2 2019. BETWEEN 80,000 TO 100,000 BAHT PER SQUARE METRE. THERE WERE NO NEW CONDOMINIUMS LAUNCHED FOR SALE THAT ARE PRICED OVER 100,000 BAHT PER SQUARE METRE. THE NEWLY LAUNCHED UNITS WERE LOCATED IN THE SUBURBS OF BANGKOK (75 PER CENT OF THE TOTAL) AND IN THE CITY FRINGE (25 PER CENT OF THE TOTAL). THERE WERE NO NEWLY LAUNCHED CONDOMINIUMS IN THE CENTRAL BUSINESS DISTRICT.

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ONLY 581 UNITS WERE SOLD FROM THE NEW SUPPLY THE SELLING PRICES OF CONDOMINIUMS IN BANGKOK DURING THE SECOND QUARTER OF THIS YEAR FROM A DURING THE SECOND QUARTER OF 2020 DECREASED IN TOTAL OF 4,022 UNITS, REPRESENTING A 14 PER CENT ALL AREAS, FROM THE FIRST QUARTER OF 2020 AS WELL

SALES RATE – AND REFLECTING A 26 PER CENT DROP IN AS FROM THE PREVIOUS YEAR. SALES WHEN COMPARED TO THE SAME PERIOD IN THE

PREVIOUS YEAR, OR A 16 PER CENT DECREASE WHEN COMPARED WITH THE PREVIOUS QUARTER. After the virus outbreak, some small developers “ changed plans, closing sales offices and postponing launches to the fourth quarter of this year or next year. At the same time, big developers also slowed “ new launches, shifting tack to drain existing unsold inventory or ready-to-transfer units at heavy discounts.

RISINEE SARIKAPUTRA Director, Research and Consultancy

2 BANGKOK CONDOMINIUM MARKET OVERVIEW Q2 2020

Market Overview

The condominium market during the second quarter of 2020 hit its lowest point, and it seems that the market will slowly pick up in the third and fourth quarter of this year. Although the Covid-19 pandemic may not directly affect the industry, it is causing severe damage to overall economy. As the domestic economy is already fragile and heavily reliant on tourism and exports, the virus pandemic could cause a contraction. This year will be a sluggish year for the Bangkok condominium market. In fact, the condominium market situation start declining from last year. Presales last year were affected by more stringent loan-to-value (LTV) rules, the global trade war and the appreciation of the baht. During April, there were no newly launch condominiums. Condo sales dropped sharply from the slowdown in demand from both domestic and foreign buyers.

Most developers took a wait-and-see approach. Several postponed project launches and focused on sales of existing projects. It is estimated that there will be another slowdown this year as there are no positive factors to outweigh negative ones, including the impact of Covid-19 and the drought. Developers with a high proportion of foreign sales may have to postpone transfers of units for foreign buyers, especially Chinese buyers, due to travel restrictions. The government has taken several steps to support the economy, ranging from interest rate cuts to relaxation of LTV rules. Despite all these measures, concerns over Covid-19 are still raging and could ultimately cause severe damage to the overall economy.

Supply of New Condominiums Launched for Sale, Supply Trend Q1 2016 – Q2 2020 As of the end of Q2 2020, the accumulated supply of Bangkok condominiums included 633,649 units. The condominium market in Bangkok experienced a total of 4,022 new condominium units launched for sale during the second quarter 2020. The number of new units for sale decreased by 73.2 per cent compared to the second quarter of the previous year, which had 14,988 new units launched for sale. Compared to the first quarter of this year, there was a decrease by 35.6 per cent, which had 6,246 new units launched for sale. Of the condominiums Source: Knight Frank Research launched for sale in the second quarter of 2020, 71 per cent were Grade C Supply of New Condominiums Launched for Sale by Grade, condominium with a selling price below Q2 2020 80,000 baht per square metre, followed by 29 per cent Grade B condominiums with a selling price between 80,000 to 100,000 baht per square metre. There were no new condominiums launched for sale that are priced over 100,000 baht per square metre. Most of the newly launched units were in the suburbs of Bangkok, accounting for 75 per cent, followed by the City Fringe area at 25 per cent. There were no new condominiums launched for sale in the Central Business District.

Source: Knight Frank Thailand Research

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Supply of New Condominiums Launched for Sale by Location, Demand Trend Q2 2020 In terms of demand in the second quarter of 2020, the newly launched condominium market in Bangkok witnessed the effects of the Covid-19 outbreak more severely, resulting in the clear decrease in purchasing power. There were only 581 new units sold from a total 4,022 newly launched units, reflecting the lowest sales rate in 10 years. The coronavirus pandemic strongly impacted the Bangkok condominium market during the second quarter of this year, and it is estimated that it will continue to hit the condominium market throughout the year, causing the Source: Knight Frank Thailand Research most damage since the 2011 flood crisis, as local and foreign demand drop.

Supply, Demand and Sales Rate of Newly Launched Condominiums by Quarter, 2016 – Q2 2020 Selling Prices

The selling prices of condominiums in Bangkok during the second quarter of 2020 decreased in all areas, from the first quarter of 2020 as well as from the previous year. The average selling price of condominiums in the CBD was 267,000 baht per square metre, representing a decrease of 0.5 per cent compared to the first quarter, where the average price was 268,300 baht per square metre. The average selling price in the City Fringe area was 147,356 baht per square metre, reflecting a 1.5 per cent decrease Source: Knight Frank Thailand Research compared to the previous quarter, which had an average price of 149,600 baht per square metre. The average selling price of Selling Prices of Condominiums, by Quarter, based on Location, condominiums in the suburbs of Bangkok 2016 – Q2 2020 was 80,000 baht per square metre, decreasing by 1.4 per cent compared to the previous quarter, which had an average price of 81,150 baht per square metre. The actual prices may be lower than the average asking price by 7 to 10 per cent or by more than half, depending on the various promotional campaigns provided by different projects.

Outlook

The coronavirus pandemic will hit the Source: Knight Frank Thailand Research property market throughout the year, causing the most damage since the widespread floods in 2011, as local and foreign demand drop. Buyer sentiment continues to fall, coupled with the worsening economic outlook. According to the International Monetary Fund and the Bank of Thailand, worldwide lockdowns will cause a recession, with global and Thai economic growth to

4 BANGKOK CONDOMINIUM MARKET OVERVIEW Q2 2020 shrink by 3 and 5.3 per cent, respectively. Charoenkrung / Narathiwad / Rama 3 : Bangkok Peripheral Area : Residential demand will contract this year, This is the area that stretches along The three major areas under this as the impact from the pandemic on the Charoen Krung Road of the Chao Phraya classification are: economy and purchasing power will be River southward just past the Sathorn tremendous. Bridge, and to the north of Sipraya Road Eastern Bangkok : as well as the area along both sides of This covers the following roads: Bangna, The condominium market in Bangkok Narathiwas Road. Srinakarin, Ramkamhaeng, Theparak, will continues to face challenges. The Romklao and Chalermprakiat. current Covid-19 situation appears to be Surawongse / Samyan / Siphaya : improving, and since May, entrepreneurs This is the area on Surawongse Road, Late Sukhumvit : are starting to launch new condominium Samyan Road and Siphaya Road as This is the section of Sukhumvit Road on sales. They are expected to resume well as some parts of Rama 4, which are both sides after Sukhumvit Soi 105 and launching new condominium projects located near the mentioned roads. 70, stretching to Samutprakran. for sale over the remaining six months of this year. Also, it is expected that, in Northern Bangkok : the second half of the year, there will be City Fringe Area : This area covers the road along the a new condominium supply of around The area is located on the edge of the northern part of Bangkok, which include 15,000 to 20,000 units while the number CBD, and provides easy access to Ngamwongwan, Chaengwattana, of new condominium units launched for the CBD. This area is an alternative Rattanathibet and Sanambin Nam. sale this year will be around 25,000 to for condominium buyers due to the 30,000 units. The selling price per unit convenient access to many shopping and Southern Bangkok : would be around 1.5 to 3 million baht, or transportation centres. The City Fringe This is the area covering the followings 60,000 to 80,000 baht per square metre, Area can be divided into the following roads: Petchkasem, Ratchapruk, which reflects the segment with the most sub-areas: Kalaprapruk, Charansanitwongse and demand. The buyers mostly demonstrate Wutthakart. real demand, purchasing the units for SKV 44-70 SKV 65-103 : their residences, but some are investors This area encompasses the edge of Late Ratchada/Ratchayothin/ Late as well. Sukhumvit Soi 65 to Sukhumvit Soi 77 as Ladprao : well as the edge of Sukhumvit Soi 44 to This area covers Ratchada from Soi 19 Sukhumvit Soi 50. and Soi 30 to the end; Ladprao from Location Definitions Soi 25 and 30 to the end; Ratchayothin Ratchada / Rama 9 / Ladprao : Road; and Kaset Navamin, Ramindra and Central Business District (CBD) : This is the area along Ratchadapisek Nuanchan Roads. This is the Central Business District area Soi 1 to Soi 17 and Soi 2 to 28; Ladprao as well as the area that surrounds it; it is along Ladprao Soi 1 to Soi 23 and Soi 2 popular for expatriates, tourists and upper to Soi 28; and Rama 9 Road, covering the class Thais for both for shopping and Ratchada/Rama 9 intersection to Rama 9/ residences. It also includes areas along Wattanatham Road. the Chao Phraya River on Charoen Krung and Rama III Roads. The CBD Area can Phahonyothin / Phayathai : be divided into sub-areas as follows: This is the up-and-coming area that offers convenient access to many academic Silom / Sathorn : institutions and government agencies. This is the area that encompasses The area covers Sathorn Road, Silom Road and the sois between Soi 1 to 15 and Soi 2 to 20. in between such as Sala Daeng, Nang Linchee, etc. Petchburi Road : This area covers Petchburi Road from Prime Sukhumvit (Prime SKV) : Nikhom Makasan intersection to the This is the section of Sukhumvit Road intersection of Petchburi and the end between Soi 1 to 63 (North side) and Soi Sukhumvit Soi 63. 2 to 42 (South side). Soi 1 to 63 (North side) and Soi 2 to 42 (South side). Charoen Nakorn / Thonnburi : This area stretches along the Chao Central Lumpinee (CL) : Phraya River from Krungthep Bridge to The area encompasses Ploenchit Road Krungthonburi Bridge. (end of Sukhumvit Road), to Rajdamri, Ratchaprasong, Wireless Road, Chidlom Bangsue / Tao Poon / Pracharat : Road, Soi Tonson, Soi Langsuan, Sarasin This area covers Samsen Road, Thaharn Road, Rajdamri Road, Ratchaprasong Road, Pracharat Sai 1, Pracharat Sai 2, Road, Rama 1 Road and Phayathai Road. and Krungthep-Nonthaburi Soi 1-39 and The area is popular with expatriates, Soi 2-50. tourists and affluent Thais.

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PHANOM KANJANATHIEMTHAO NATTHA KAHAPANA Managing Director Executive Director, Head of Knight Frank Phuket +66 (0) 2643 8223 Ext 124 +66 (0)2643 8223 Ext 400 [email protected] [email protected]

RISINEE SARIKAPUTRA Director, Research and Consultancy +66 (0)2643 8223 Ext 180 [email protected]

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