Townhouse revival

Townhouse revival

branching out: AP (Thailand) Plc is among the big-name developers getting into the townhouse market with The City. Photo: Supplied
branching out: AP (Thailand) Plc is among the big-name developers getting into the townhouse market with The City. Photo: Supplied

The Bangkok residential market continues to be a lively one, with condominiums attracting most of the attention from developers and buyers alike. And while it's true that the market for single detached houses has been slowing, there will always be people who want a dwelling with some land, even if it's only a small plot. This helps explain the steady popularity of townhouses among price-conscious consumers.

Developers launched an average of 40,000 new single detached housing units per year in Bangkok in the period from 2001-11, but that has slowed to about 20,000 a year in the past six years. This reflects the steady increase in land prices in the capital as good sites become more and more scarce.

Ever since the arrival of the BTS in 1999 and the MRT in 2004, land prices along mass-transit routes have risen steadily and dramatically, to the point where it is not economical to develop a detached-housing estate, even if you could find a large plot of land. The only way to build is up, making high-rise condominiums the main choice for developers seeking to maximise returns.

In the past decade, developers have been moving farther out to the suburbs of Bangkok and other provinces nearby in search of sites that would be good for detached housing estates. But land is relatively expensive no matter where they look, and this has pushed up the prices of even modest mid-range houses to as much as 10 million baht. The days when a consumer could find a good-quality small "starter home" for 2-3 million baht are numbered.

Some developers have taken note of this trend and are switching to develop small to medium-sized townhouse projects with a total of 200 to 300 units. Townhouses now account for around 51% of all landed housing units available in Bangkok, with 70,773 units, followed by single detached houses at around 36%.

A growing number of Thai buyers are looking for townhouses rather than condominiums in areas along existing and future mass-transit lines, especially the latter, which will extend to the farther reaches of the suburbs.

About 47% of the townhouses available in Bangkok are selling for between 2 million and 3 million baht per unit, mainly in suburban areas. Units priced from 3 million to 5 million baht each account for around a 30% share, with most located near mass-transit lines now under construction. More upscale units priced from 10 million baht and up can be found in the inner city close to existing BTS or MRT lines, and a few projects start from 20 million baht per unit.

The average take-up rate for all townhouses in Bangkok is around 65%, with the price range from 2-3 million baht leading the table in units sold but with a take-up rate of just 64%. With more than 12,000 units still waiting to be absorbed, most developers are being careful not to release all townhouses in a project at once, preferring to offer them in phases. Townhouses priced at more than 7 million baht each have a 68% take-up rate as there are not many available in this range.

The most popular location for townhouses is the northern area of Bangkok, with as Klong Sam Wa alone accounting for 16.4% of all townhouses, followed by Lad Krabang, Sai Mai, Prawet and Bang Khun Thian. Only Bang Khun Thian is in the western part of the capital, while the others are in the northern and eastern areas where more mass-transit lines are in the pipeline and land prices are better suited to developing townhouses rather than single detached housing estates.

Many large, listed and well-known developers are becoming interested in the townhouse market. They include Pruksa, Sansiri, Land & Houses, SC Asset, Ananda, Property Perfect and Q House. Pruksa has the largest share in the Bangkok townhouse market and all of Thailand, with approximately 10,000 units or 28% of the total in the capital, under its brand. Sansiri is second with around 8% but still has many projects in the pipeline, as it sees the growth trend slowing in the condominium market.

Another factor making townhouses attractive to developers is that the market consists almost entirely of end-users and not people buying for speculation or investment. Construction periods are relatively short and it takes only a few months to transfer a unit to a buyer, compared with up to two years for a large condo development. Some developers are selling completed and ready-to-move-in units, so they will receive payment even faster.

As well, developers are not overly concerned about buyers who change their minds about taking transfer or are unable to secure mortgage loans, as the units can be offered for sale again.

Overall, the townhouse market in Bangkok this year will be similar to the past three years, with steady demand, especially in areas along new mass-transit lines.


Surachet Kongcheep is a veteran local property market expert. He can be reached at surachet.jock@gmail.com

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