Jury still out on condotels

A new trend emerging in the Bangkok property market is the condo-hotel, and while such developments are seen as sound investments, the jury is out on whether people want to live in a place that has a ful-time hotel atmosphere.


Among the entrants in the segment is T.C.C. Capital Land, which last week announced plans for a resort-style condotel, North Park Place, located at the Rajapruek Golf Course on Vibhavadi Rangsit Road. HKR Asia-Pacific International, a subsidiary of HKR International in Hong Kong which owns the five-star Sukhothai Hotel, earlier announced plans for a high-end condominium attached to the hotel. Rajadamri Residence, a subsidiary of Minor International Plc, has also announced the construction of St Regis Hotel and Residence on Rajadamri Road near the Minor-owned Four Seasons Hotel.

Ian Soo, the managing director Hamptons Property, believes condotels would likely be more successful in resorts than in the capital because the units would be mostly rented out to holidaymakers who stay there only briefly.

A certain type of individual might choose a condotel as a permanent residence but that person would have to accept some trade-offs, he said. "A lot of people, if they're living there long-term, want a more homely atmosphere; you see other families in the lobby rather than businesspeople."

In a hotel lobby one has strangers checking in and out all the time whereas in a more natural setting one's neighbour might say hello and there would probably be children playing within the compound, Mr Soo said, adding that a hotel atmosphere is not always relaxing.

Looking at the general direction of the Bangkok condominium market, Mr Soo and branch manager Kleber Medeiros say that prices are unlikely to move dramatically over the next few months, unless some developers experience trouble, which may cause a panic.

"From the seller's side, I think prices have reached a good point if they are looking to realise value from their units from selling, I think this is certainly not a bad time to sell, prices have increased a great deal," said Mr Soo.

"From the buyer's side, there are some good-value units in the market as well. There is more supply than demand, so it's a buyer's market and they can pick up some great units at good prices. We would tell them, don't hesitate if you can get a good deal."

It is important to remember, he said, that supply-demand dynamics have changed. A lot of people who have bought condos are now trying to rent out or sell them but the number of buyers has not increased at the same level. "So there is this increasing gap _ the number of people who want to buy and sell _ and this is what is putting pressure on prices."

In the current buyers' and tenants' market, Mr Soo says people must carefully monitor what the market is doing in terms of pricing. "If you price yourself out of the market _ you know landlords have these figures in their heads, looking at 12 months previously or two years previously _ there's no point doing that. You have to look at prices now, if you want a tenant, price sensibly."

Where opportunities for speculators and retail investors are concerned, Mr Soo said this depends on the specific unit but generally the opportunities are rarer now. "It's important to differentiate between investment and speculation. Investment is generally a longer-term view, there are certainly opportunities for investment in terms of good rental yield and so on. Outright speculation, I think, is much more difficult now simply because prices have come under pressure so it's not easy to buy something and just flip it a few months later."

Mr Medeiros says speculation was still possible if one buys a unit in a good building and in a good location but this market is not as good as it used to be.

Over the last two months Hamptons has sold good units at Sky Villa, AP Citismart and The Met in Sathon. For rentals, all the new grade A buildings including The Legend, Domus, The Lakes, AP Citismart and Sky Villa are popular.

Mr Medeiros pointed out that the Skytrain and subway continue to be key factors in the condo market. Bangkok's first Bus Rapid Transit, due to open next July and run from the Chong Nonsi BTS station along Narathiwat Ratchanakrin and Rama III roads and then across the river to Ratchaphruek, will not be as much of a factor in his view. The main reason, he says, is that foreigners continue to prefer living in the centre of the city with Sukhumvit being the most popular area along with the Sathon, Silom, Ratchadamri and Lang Suan areas.


Mr Soo noted that the new bus system will help if it operates as planned but it is unlikely to have an effect on local property values. "I don't think it will make a great deal of difference."

Both Hamptons executives doubt whether the riverside will really pick up as a major expat area, especially in Thon Buri, even once Skytrain access is available. The fact remains, says Mr Soo, that anyone with a car would continue to face heavy traffic problems.

"The traffic situation is much more exaggerated here than in London, where everybody would love to live by the river because you have 20 roads coming in and out, so it's no problem. But here it's actually a bottleneck disaster," he said.

Bangkokpost: by NINA SUEBSUKCHAROEN

Premium riverfront sites offer long-term benefits

Bangkok, not unlike many other great cities around the world such as London or Shanghai, has grown up around a river _ the Chao Phraya River. For generations it has been the economic hub of trade and commerce with businesses and homes cropping up all along the waterway from its origins upstream in Nakhon Sawan.

Over the centuries it has inspired kings and queens, literary greats and architects who have created historical landmarks and cultural icons in the form of temples, palaces, teakwood houses and bridges along its banks.

Its importance for trade is undiminished as longtail boats and rice barges ply the famous channel as the river retains a buzz that is still very much in existence today.

The first international five-star hotels found their home on the banks of the Chao Phraya too, beginning with The Oriental to be joined by the likes of the Shangri-La, Royal Orchid Sheraton and The Peninsula more recently. They have been standard bearers for international hospitality and now it is the turn of international property developers to build on this progress and position Bangkok as a premium property investment proposition that has enormous underlying potential for growth.

The market this year has seen some interesting trends emerge, and these will continue to have a bearing on the riverside property market, an area that remains a busy location for developers representing 26% of new launches in the first half of this year.

The major change this year has been economic factors driving demand at the lower end of the market as housing affordability emerges as a key factor. Stable interest rates and lower pre-completion payments are key drivers of sales in that segment.

Demand in the higher end/luxury segment still appears cautious but has shown positive signs in the first half 2007. This segment is more attuned to levels of confidence in the market and Thailand's general economic outlook. An easing of currency volatility, along with the election in December and clear visibility in future mass-transport and infrastructure projects will be the major forces driving the upper-market segment forward.

Demand will continue to change over time, as preferences move toward condominiums rather than houses. Factors to consider will include close proximity to transport and retail facilities. Purchasers will look for more affordable units, perhaps smaller in size with efficient bedroom/bathroom/living spaces. When buying a property, purchasers should consider what they can afford, and invest in properties they would be willing to live in.

Currently, the best opportunities are in prime sites. These include existing prime areas in desirable inner-city locations, as well as emerging prime sites in new areas covered by future mass-transit systems. The risk attributed to existing and future prime sites is different _ existing prime sites are considered "blue chip", while newer sites are more speculative.

Bangkok still offers tremendous value compared to other regional and international property options, and with it, extremely strong underlying potential for growth. Prices of prime properties in Thailand are still a fraction of those in neighbouring countries. Hong Kong is selling prime properties for more than one million baht per square metre, Singapore for 600,000 to 750,000 baht per square metre. Shanghai and Dubai are now selling for well above 200,000 baht per square metre, having started at the same level as Bangkok in 2003.

Thailand property values, as well as the prices of stocks listed on the Stock Exchange of Thailand, have increased at a slower pace over recent years than those of its neighbours due to the uncertain political situation that has led to increased investor caution.

Once this uncertainty diminishes, we expect prices will begin to push up strongly. The jump could be significant, as we have already seen some developments looking at prices of 200,000 baht per square metre, while a year ago these would have sold for 100,000 baht.

The investment opportunities in condominium developments now, and certainly pre-election, are excellent. Prices are increasing, and are certainly expected to jump even more next year, with the best short- and long-term investment choices in prime areas.

Nigel Cornick is chief executive officer of Raimon Land Public Co Ltd, Thailand's leading international property developer with projects in Bangkok, Phuket and Pattaya. For more information visit www.raimonland.com

Source: NIGEL CORNICK (BangkokPost.com)