As COVID-19 continues to upset the global economy and raises questions on the future of the real estate sector, recent insights from CBRE Thailand, a leading international property consultant, reveal investment opportunities in the residential market from an end-user friendly market and rare-to-find units.
Ms. Artitaya Kasemlawan, Director of Advisory & Transaction Services – Residential Sales, CBRE Thailand commented, “the pandemic which has slowed down sales of residential properties has opened up new opportunities for investors. The first opportunity is the lowered price. Condominium developers are pushing out various sales strategies offering buyers promotions and special discounts which are rarely found in a normal market situation. Secondly, buyers can now afford a larger-space unit under the same budget. For instance, in normal times when a budget may allow for an 80-square-metre condominium unit with 2 bedrooms, now the same amount can purchase a 90-square-metre unit with the same number of rooms. For condominiums, this change in space is considered significant.”
“The temporary absence of speculators has also created market conditions that are more friendly to end-user buyers. The buyers now have more time to make a decision with lack of competition from speculators. By nature, end-users spend more time to thoroughly consider a unit before deciding to purchase compared to speculators,” Ms. Artitaya added.
However, property investors should not expect every unit to have the same attractive promotion or discount. Investors should also understand that the percentage discount will still be subject to various conditions depending on the developer’s need for cash flow. While the price may play a key role, the market is currently very competitive and investors should not overlook other basic factors such as the project’s location, design, amenities and accessibility.
“The important question investors must ask themselves is what is the objective of their property purchase. A unit with the best offer might not be the most desirable unit type or size for tenants if the investor is looking at buying property for rental purposes. It is recommended they consult experts in the resale market to determine the preferred location with the highest tenancy. For example, if the objective is to attract Japanese tenants, investors should realize that Japanese expatriates, in general, prefer to live in an established Japanese community in locations like Sukhumvit, especially the Thonglor and Ekkamai areas. Units in the Sathorn area, even with the tempting discount, may not be their first option and the landlord may find it slower to fill up the units,” said Ms. Pornpimol Phuengkhuankhan, Head of Advisory & Transaction Services – Residential Sales Ad Hoc, CBRE Thailand.
Another opportunity for long-term investment is units in prime buildings which are rarely available in the market might also be offered for sale. “The rare units which have re-entered the market will mostly be offered with less discount. A long-term investor should rather see this as a unique opportunity to own a valuable asset,” Ms. Pornpimol added.
Branded residences managed by leading hotel brands provide another interesting option for investment as their supply is limited and usually they are situated in prime locations. Branded residences have high potential for capital appreciation because these projects are always well maintained following brand’s high standards. At present, rental yield is also guaranteed for some projects,” Ms. Artitaya concluded.
