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April 12, 2013 6:31 pm
Bangkok has a remarkable ability to suffer adversity yet barely break stride. Just three years ago, bodies lay in the streets of the Thai capital’s choicest neighbourhoods after the showdown between troops and thousands of Red Shirt anti-government protesters who had turned the area into a makeshift camp, paralysing the business district for months.
Yet, when the chaos was cleared, Krung Thep – Bangkok’s Thai name, meaning City of Angels – kept on soaring. The Thai economy powered through the global downturn. Likewise, Bangkok’s go-go property market hardly skipped a beat. According to Surachet Kongcheep, senior manager of research at Colliers, the only thing slowing condominium developments – a sector dominated by Thai buyers – is a shortage of construction labour.
There was one sector of the market that faltered during the slowdown, however: interest from overseas buyers. According to CBRE, in 2008 overseas buyers made up 40 per cent of the high-end sector, and this slumped to 15 per cent in 2011. But with Bangkok’s prime and super-prime property markets picking up in the past six months, it looks like overseas investors are starting to return. Last year, foreign ownership rose from 15 to 22 per cent, with the increase coming mainly in the second half.
A key trend that has given wealthy buyers the confidence to dip their toes back in the water has been the arrival of branded property linked to global hospitality chains, such as St Regis, Banyan Tree, Sukhothai, Ritz-Carlton and Waldorf Astoria – names they assess will serve as a guarantor of the highest quality.
Typically, large condominiums in the best parts of Bangkok have a five-star hotel on site managing common areas and ensuring high standards, something that cannot be said of all Bangkok’s high-end properties. The dozen or so developments sit on prime land in the central business district, encompassing Rajadamri, Central Lumpini, and Sathorn-Silom.
“Branding alone is not a recipe for success,” says Robert Collins, chief executive of Savills Thailand. “Location is crucial, along with accessibility and good views. We classify Rajadamri Road like Knightsbridge in London or Orchard Road in Singapore. Carrying the imprimatur of an über-brand guarantees standards in the properties will not slip, as that would damage hard-won international reputations.”
The confidence hotel brands can inspire is important for international buyers. About 70 per cent of buyers from overseas now hail from Hong Kong, Singapore, Shanghai and Russia, according to Knight Frank. Buyers from India, the Middle East, Australia, Taiwan and South Korea make up about 10 per cent, with a tiny proportion from Europe and US because of persisting currency weaknesses.
Prices in Bangkok are a fraction of those in Hong Kong and Singapore, where the imposition of special stamp duties to curb speculation has driven buyers to the Thai capital, which is still free of such taxes. Top-end properties in Bangkok averaged £3,198 per sq m, according to CBRE, while Singapore reached £16,445 per sq m, and Hong Kong £21,200 per sq m.
“The crackdown in other markets and the feeling that Bangkok has been a little in the shadows in the past four or five years, while the economy and property have done well, has fuelled overseas buyers’ interest,” says James Pitchon, executive director of CBRE Thailand.
Average property prices in Bangkok increased 9.4 per cent last year and Risinee Sarikaputra, associate director of research at Knight Frank Thailand, thinks the rises could continue: “In these areas of downtown Bangkok there’s a shortage of land for premium developments, which will inevitably drive up prices.”
The potential for capital gains, and rental yields of about 6 per cent, is proving alluring. Buyers are often investors looking for better returns than banks offer but who also travel to Bangkok often and want a property that offers all the benefits of a five-star hotel, including a gym, spa, pool, restaurants, housekeeping and concierge services. The St Regis Residences on Rajadamri Road, with views over the Royal Bangkok Sports Club’s horseracing track and golf course, tick all the boxes. The development has a dedicated entrance to Bangkok’s Skytrain and is near shopping malls.
One apartment on sale there is a 439 sq m four-bedroom 30-year leasehold on floor 33 for Bt107m ($3.7m). The facilities and swimming pool for the residences are separate from the hotel’s, and have their own elevators.
Proximity to the commercial district is vital for buyers who travel to Bangkok on business. Thailand is likely to become a more important economic hub as the creation of the Asean Economic Community, which aims for economic integration of the 10-country southeast Asian grouping through a single market, approaches in 2015.
For wealthy buyers who demand the best, good design is crucial. The Ritz-Carlton Residences, with accompanying boutique hotel, was designed by German Ole Scheeren while he was with Rem Koolhaas’ Office for Metropolitan Architecture. The interiors of the 194 condominiums were conceived by London-based designer David Collins.
The Sukhothai Residences in the compound of the Sukhothai Bangkok Hotel was completed late last year. The largest penthouse, at 1,115 sq m, with three bedrooms and its own private pool, is on the market freehold for Bt451m ($15.4m).
Yet it is not all plain sailing for the super-prime market. The Sukhothai Residences, the city’s first hotel-linked condominium, was launched in 2008 but still has 30 per cent of units to sell. Meanwhile, Banyan Tree Residences, completed in 2008, has nine of its 24 apartments remaining.
● Foreign ownership of freehold condominiums is limited by Thai law to 49 per cent of the property
● For new-build, the developer can ask buyers for transfer fees of 2 per cent but by law must bear all other transfer costs
● Overseas buyers must transfer 100 per cent of the purchase price from abroad into Thailand in baht
What you can buy for ...
£500,000: A two-bedroom, 119 sq metre apartment in the Banyan Tree Residences
£1m: A three-bedroom, 160 sq metre freehold apartment in the 185 Rajadamri development
£5m: A three-bedroom, 538 sq metre simplex apartment on the 69th floor of Ritz-Carlton Residences, with 99-year leasehold
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