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Bangkok General Overview - 1st QR 2007 In Q1 2007, seven new apartment projects, all located in the Sukhumvit area, with 256 units, were completed. This increased the total supply by 3% quarter-on-quarter or 2.9% year-on-year, and was the fastest rise since Q4 1999 (some apartment buildings were converted to other uses in the last 12 months hence the difference in numbers). Supply in the Sukhumvit area had the highest growth rate of 5.2% year-on-year, while the other areas remained unchanged from the previous year. In As of February 2007, the total number of expatriates continued to rise by 12.2% on a year-on-year basis despite the slowing economy. The largest expatriate group in Bangkok is the Japanese (22%), followed by Indians (11%) and the Chinese (9%). In this quarter, the expatriates showing the biggest increase were mainly Indian (increased by 31%). Residential Sales - 1st QR 2007 The supply of completed freehold and leasehold condominium units totaled 48,128 units as of the first quarter of 2007. The completion of four projects added 1,580 units to the condominium market, which increased by 3.4% quarter-on-quarter and 9.5% year-on- year. Sukhumvit remains the most popular area, where about 34.6% of the condominium supply and nearly 50% of the grade A condominiums are located. The condominium vacancy rate increased slightly in both the grade A and grade B markets. The overall vacancy rate of downtown freehold condominium was at 15.9% in the first quarter, a rise from the 15.2% recorded in the fourth quarter. Grade A buildings have somewhat higher vacancy rates than those of grade B buildings on average, at 18.3% for grade A units compared with 15.7% for grade B. The increase in vacancy rate has been due to the fact that it takes time for owners to decorate and then either occupy or lease out their properties. The total number of occupied units rose from 37,802 to 38,793. The average achieved price of completed grade A condominiums increased by 0.04% quarter-on-quarter and 2.1% year-on-year, while the average asking price of new projects increased by 2.6% quarter-on-quarter and 7.8% year-on-year Residential Leasing - 1st QR 2007 In Q1 2007, seven new apartment projects, all located in the Sukhumvit area, with 256 units, were completed. This increased the total supply by 3% quarter-on-quarter or 2.9% year-on-year, and was the fastest rise since Q4 1999 (some apartment buildings were converted to other uses in the last 12 months hence the difference in numbers). Supply in the Sukhumvit area had the highest growth rate of 5.2% year-on-year, while the other areas remained unchanged from the previous year. In As of February 2007, the total number of expatriates continued to rise by 12.2% on a year-on-year basis despite the slowing economy. The largest expatriate group in Bangkok is the Japanese (22%), followed by Indians (11%) and the Chinese (9%). In this quarter, the expatriates showing the biggest increase were mainly Indian (increased by 31%). Retirement and Second Home Market For the last three decades South East Asian countries have competed to attract tourists, This competition continues, but in recent years attention is increasingly shifting towards the extended market of the tourism industry, which is the retirement / second home (RSH) market. The growing number of international purchasers is a key driver of the demand for retirement/ second home properties. In vying for a larger share of the demand, some countries have actively reviewed their foreign property ownership restrictions and visa rules in order to attract these buyers. Tourism is a critical industry to Thailand’s economy, contributing roughly 9% to its GDP in 2005. Historically tourists stayed in hotel accommodation, but following a global trend there is growing demand for villas and condominiums particularly for longer stay tourists. Purchase of an overseas property enables the buyer to achieve the goals of both utilizing it both as a holiday/retirement home and secondly as making an investment in a real estate market with considerable growth potential. Viewed from the context of global demographic trends, retirement overseas in warmer climates is increasing, for example the U.K. department of Works and Pensions reported that 660,000 U.K. born people received a pension overseas in 2005, representing about 5.7% of the country's state pension recipients. This market has a huge potential and is currently driven mainly by European, American and Australian buyers, but with the ever increasing growth of Asia’s affluent classes, the drivers fuelling growth are likely to remain strong as the regional business environment continues to strengthen. While Thailand has long established itself as the favoured destination for tourists wanting to own their resorts as well as investors of RSH, its direct rivals, Singapore and Malaysia are fast emerging as popular alternatives, and both have implemented policies targeting the RSH property purchasers. Furthermore, this kind of opportunity is also knocking on the doors of some more recently emerged markets, such as Vietnam. For Thailand to retain its competitive edge, this market needs the support of new government policies, new products and new services to facilitate and attract potential buyers.
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