Condos in Bangkok’s CBD areas
Over the last 30 years or so, the evolution of the condominium market in Bangkok’s Central Business District (CBD) areas has been quite remarkable.
As an indication of the scale of change: at the turn of the 1990’s there were fewer than 3,000 completed condominium units in Bangkok’s CBD. Currently, there are over 140,000 (50+ times growth in stock), representing just over 20% of all condos in the city.
The key CBD areas
In this 30 or so year time frame, Bangkok’s “traditional CBD” area around Silom/Sathorn Roads, close to the Chao Phraya River, has also evolved, changed and been extended.
Historically, the River was an important mode of transport and trade. Therefore, commercial activity was initially concentrated around its banks. The traditional CBD was centred around Charoenkrung Road and Yaowarat (Chinatown). In time, larger scale office and condo developments gradually took hold, later extending the CBD north eastwards up Silom and Sathorn Roads towards Rama IV and Lumpini Park.
As the city continued to grow, secondary or alternative CBD areas emerged. Many people still wanted to live in the city, but preferring to live “uptown”, away from the congested riverside.
Continued growth means that the Bangkok CBD condo market can now be said to embrace the Wireless Road/Lumpini area; Sukhumvit (from Nana Soi 4 to Phrom Phong around Sukhumvit Soi 24); Thong Lor/Ekamai (Sukhumvit Sois 53 and 63); the Rama IV stretch between Silom and Asoke; and, more recently, the Rama IX/Ratchadapisek area.
Other areas considered as ongoing extensions to CBD areas where condos are rapidly developing include the Rama III/Riverside location. In addition, the Phaya Thai/Ratchathewi and Bang-na areas can be included in the list.
There are a variety of terms in use to describe the different CBD’s such as “core CBD”, “outer CBD” or “fringe CBD”. Yet, with the advancements in communications and changes in the ways of working (co-working, hot desking etc), boundaries between the different CBD’s continue to blur.
Background to growth and change
There have been a number of key drivers to the evolution of the Bangkok CBD condo market and, as a result, the continued demand for condos in the city’s CBD areas. These can be neatly categorised as follows:
The Condominium Act permitting the sale of freehold strata title condominium property came into effect in 1979. Foreigners could, for the first time, own 100% of a property in Thailand, albeit subject to the “49% foreign quota rule”. This quota restricts ownership of up to 49% of the floor area in a condo block. However, not too many blocks reach the quota limit and, so, usually, foreigners can buy in most condo blocks of their choice;
Some people feel that the traffic never seems to get any better in Bangkok. Yet, traffic flows have actually much improved over the last few years with better traffic management. There are also new expressways and ring roads around the city.
The big game-changer, though, for condo development in the city and extension of CBD areas, has been the ongoing development of the two mass-transit rail systems. These have been progressively developing over the last 20 or so years. The BTS (underground) and MRT (skytrain) systems have been major catalysts in stimulating condo and other developments in both traditional and “new CBD” areas.
The first wave of condo developments outside of the traditional areas were around Ploenchit, Asoke (Sukhumvit 19-23 or 12-20) and Phrom Pong (Sukhumvit 22-26). These areas remain perennially popular. Progressively, condo development moved on towards the south east and on to Thong Lor/Ekamai and, more recently in the last 5-7 years along Rama IV and Rama IX;
Quality of offerings
Condos in the CBD areas started to become more popular in about a 5-7 year period beginning in the late 1980’s. In such time, some 90,000 condo units were built city wide in Bangkok. To begin, the condo market was highly speculative with “investors” trading off-plan contracts as if they were stocks or shares. There with little thought about design, specification or who the end-user target market might be. Purchasers were essentially buying a bare concrete shell with a very basic bathroom. Developers were selling units without wall, floor or ceiling finishes. There were no fitted kitchens, air-conditioning, lighting or electrical outlets.
Today, most CBD condominiums are sold on a fully fitted basis, including air-conditioning and kitchens with appliances. Purchasers simply need to buy their own movable furniture. In some cases, usually the higher-end condos, developers will sell fully furnished and equipped units;
As the quality of the “product offerings” improved, a combination of social changes also drove demand for condos in Bangkok’s CBD area. This was initially for units around Silom or the prestigious Ploenchit/Wireless area. Developments such as Somkid Gardens just off Ploenchit Road set new standards in quality and size of accommodation– and further induced demand.
Wealthy Thais started to favour living in a condominium, especially as Bangkok was becoming a more geographically centrally focused city. Accessibility to CBD areas was improving with the best offices, shopping centres, restaurants and hospitals being in the city centre area.
A second stimulus to condo demand in the CBD saw young people leaving home earlier than before, and being able to afford to buy their own home. This change coupled with an overall increase in disposable income fuelled the mainly one-bedroom CBD condominium market outside the traditional CBD areas;
What’s happened to condo prices In Bangkok’s CBD over the last 30 years?
Overall the Bangkok condominium market has seen almost constant growth. Certainly, prices have continued to rise over the last 15+ years, with only a brief slowdown during the 2008 global financial crisis.
In the late 1980s, it was possible to buy a condo in the CBD for around Baht 25,000/m2. The most expensive condominium project was the aforementioned Somkid Gardens, behind Central Chidlom department store. Units were selling off-plan for around Baht 35,000/m2.
Since then, prices for new buildings have risen by more than 1,000% with a typical market average range of Baht 150,000-200,000/m2 for condos in CBD areas. However, many new condominium units in prime CBD locations sell for more than Baht 300,000/m2. The most expensive condominium development in the core CBD, though, is at 98 Wireless where the developer Sansiri, says it sold a unit for more than Baht 700,000/m2.
A solid investment choice for long term capital growth
With the continued development of the BTS and MRT lines, the definition of CBD areas will continue to evolve and new areas emerge. As a result, the demand for condos in Bangkok’s CBD areas will continue to be strong. The dual requirement of owning somewhere to live close to work or the wish for an investment in the primer areas of Bangkok is expected to sustain capital growth over the long term.