Florence Residences
Florence Residences , Condominiums and Apartments - How Have Things Changed In The Past 10 Years In Bangkok?
By http://singnewhomes.com/florence-residences-showflat-location-hougang-kovan/
The upcoming launch of The Florence Residences – a mega project with more than 1,000 units – will likely set the tone for other developments heading to the market this year, some analysts say.
Between 400 and 500 units are expected to be released on March 2, depending on interest at the preview this weekend, said Mr Chng Chee Beow, executive director of Logan Property (Singapore), the developer. “We are targeting an average selling price of $1,450 per sq ft (psf).” The Florence Residences™ at Kovan. 1-5 Bedroom. Functional layout with attractive pricing. From $6xxk onwards. Register with us now for a VIP Preview, first mega launch in Singapore.
Florence Residences prices of most apartment buildings have increased very marginally over the past 10 years. Whereas a spacious 3 bedroom apartment in Sukhumvit area would have cost 70,000 Baht 10 years ago, it may cost you 85,000 Baht today. That's only a 20% increase over 10 years, actually far less than inflation, and in many ways an apartment is cheaper now than 10 years ago.
Why? It's difficult to say but I would guess that ongoing political problems, 2 coups, and a pretty stagnant economy barely kicking over at around 3% growth in GDP each year are the reasons. This level of growth may be acceptable for a world leading developed nation, but for Thailand that (let's face it) still has some way to go in terms of development, it's not very good.
The Florence Residences showflat apartment rental market in Bangkok is mostly governed by expats. Thai people don't rent at these prices, either they don't earn enough, or are sensible enough to buy a property in the suburbs, or are part of the immensely wealthy elite and already own several blocks in central Bangkok. As the number of expats has remained fairly constant, so have rental prices.
Newly built condominium buildings have seen a rise in rental prices, and there will always be a small percentage of people who have sufficient budget and only want to live somewhere very new, something is particularly true of Japanese renters, but the new buildings will become old and once they have been constructed and a rental price has been established, you will notice that the price will stay relatively stagnant from then on.
This is actually the same with condominiums for sale. Once a building has finished construction, a sales price and rental price is established, and it will remain stagnant at this level for years to come.
But prices have been increasing in Bangkok, everyone knows that!! So am I wrong?
Condominium Sales Prices Bangkok 2008 - 2018
I don't think I'm wrong. There are some condominium buildings that have experienced a very good level of capital appreciation in recent years, but "on average" they haven't.
Yes, prices have been increasing significantly in Bangkok, and this is something that all developers will happily promote to you when selling you their brand new project. They will show you graphs with an upward trend in prices, and show you that prices are increasing at least 5-10% year on year.
Prices of brand new buildings have been increasing a 5-10% year on year, but not completed buildings.
This is mostly down to increases in land prices. As land prices increase (and to some extent construction costs) so have the cost of new buildings. So new buildings get ever more expensive, but are completed buildings following suit?
No. And this is why I'm not wrong. A building that cost 150,000 Baht/sq.m. 5 years ago, may now only be 160,000 Baht sq.m. In this example around 1.5% compound growth. This building was brand new 5 years ago, and a brand new building today still under construction might cost you 200,000 Baht/sq.m. which is 33% more than the new building was 5 years ago, hence the 5%++ compound growth.
But the fact remains, the building that YOU purchased 5 years ago may have increased only 1.5% compound per year.
This is the ongoing trend with Bangkok property. New buildings constantly set new benchmarks in prices, and then remain the same. With even newer buildings adding a layer on top, setting new benchmarks, and then remaining at the same level. Even newer buildings still, just keep adding another layer on top.
This is why you will find such huge price discrepancy between buildings, even if they are located right next door to each other. An example would be Lumpini 24, a new condominium located on Sukhumvit Soi 24, where prices will fetch around 250,000 Baht/sq.m. So, a 60 sq.m., tiny little 2 bedroom unit will cost around 15,000,000 Baht.
Immediately next door is an older condominium called President Park, where prices have remained stagnant at around 60,000 Baht/sq.m. So, a very spacious 3 bedroom unit of 260 sq.m. will cost you around 15,000,000 Baht.
Four times bigger, located immediately next door, but the same price! So the old adage "Location, location, location" doesn't apply here. It is ONLY based on the age of the building.