Luxury sector still soars

Political turmoil, including a military coup, have had little effect on spiralling prices in the kingdom's high-end property market

Despite the country's social and political turmoil, Thailand's property market - at the luxury end - continues to break new ceilings for those taking a long-term view.

The bloodless military coup in 2006 was followed by a record-breaking 2007 in terms of prices and first half performance. This year has seen the trend continuing, with developers launching more high-end products.

The next 24 months will see projects launched where the entry level will start at US$3 million and beyond.

It is this 'super' luxury sector that is seeing the most growth, particularly in Bangkok, Phuket and Koh Samui. For other popular resort areas such as Hua Hin and Pattaya, the demand is not there yet in the ultra-high end market.

According to premium property developer Raimon Land, Bangkok's luxury condominium performance last year showed the average price per square metre rose 5.4 per cent year-on-year to 88,757 baht (HK$20,166), and it grew another 8 per cent to 95,429 baht in the first half of this year. The highest recorded price hit 343,000 baht per square-metre early this year for The Sukhothai Residences on Sathorn Road, next to the Sukhothai Hotel. This represents a 56 per cent jump over the project's high of 220,000 baht per square-metre in the second half of last year.

It should be noted that 33 per cent of last year's sales were for units priced over 100,000 baht per square metre, and those in the 10 most exclusive developments sold for an average of 145,113 baht per square metre, illustrating that buyers will pay a premium for the most desirable projects.

Demand in Thailand's four major beach resort areas - Koh Samui, Hua Hin, Pattaya and Phuket - is similar. For the first half of this year, Pattaya achieved 108,776 baht per square metre and Hua Hin a 92,314 baht per square metre average, further evidence of a robust market. New luxury developments such as Raimon Land's The Heights Phuket, which is in its final construction stages, continue to attract high prices.

High-end condominium units in the resort areas, priced over 100,000 baht per square metre, accounted for 23 per cent of the total sales of all resorts last year, while the 10 most exclusive developments sold for an average of 123,715 baht per square metre .

These are sales achieved since the military coup and throughout the political turmoil - so despite media and doomsayer reports, Thailand continues to represent some of the best value for high-end residential property in Southeast Asia, especially in resort areas, says Nigel Cornick, Raimon Land's CEO.

'I have always had a great deal of confidence in Thailand as a long-term play for luxury property investors,' he says. 'Of course there will be some bumps along the way, but Thailand is an incredibly resilient country. As an indication of our confidence in the market, we will be launching our 185 Rajadamri project in Bangkok where prices will start at around US$1 million and these are prices never heard of before in Thailand for freehold condominium projects.'

'If the Sukhothai Residences is achieving 343,000 baht per square-metre at the moment then I expect 185 Rajadamri will break the 400,000 baht per square-metre soon after we launch. Regional buyers, especially those from Hong Kong and Singapore, seem to be immune to Thailand's regular 'issues' and have remained strong investors in the country for the past decade.'

This is a sentiment that major residential agents subscribe to in Thailand as well. Robert Collins, is the managing director, agency and investment for Savills (Thailand) and is based in Bangkok, and says he too has faith in Thailand's ability to overcome short-term setbacks and still present property investors with a solid platform and a market they should have confidence in.

'We witnessed an initial slowdown [when the previous prime minister left office]. However, the level of new demand and transaction completions have been unaffected with little or no noticeable impact so far,' he adds.

'It's too early to predict any potential long-term drop in buyer sentiment, however, as Thailand remains the most desirable and accessible holiday destination in the region, and localised political issues are not expected to develop as an impediment in the Thai resort markets.'

Thailand's most popular resort is Phuket, which also continues to set record prices and remain removed from whatever may be troubling those in the capital.

Some of Thailand's most expensive condominiums and villas are located on the tropical island and Daojai Tanommuang, senior luxury specialist with Phuket-based agent Indigo Real Estate, says the ultra-high end portion of the market continues to remain largely unaffected.

'While the effect these events have are felt to a greater extent on the Bangkok market, it is less noticeable in the Phuket real estate market,' she says.

'This latest global recession has had some effect on the take-up rate of middle price point properties, but the luxury real estate market does not seem to be affected at all.

'Sales have been robust. Prime real estate plots that are either absolute beachfront or with great sea views have held their value, indeed even appreciated in value, and certainly there is still a strong demand in the luxury sector.'

While those in the sector are reluctant to talk up its performance, all seem to agree that new levels of luxury are being achieved in Thailand and, despite the hiccups the country faces from time to time, the upmarket home sector will continue to provide value in the long run.