Chiangmai Condominium Market 2013

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MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

THAILAND

CHIANG MAI CONDOMINIUM MARKET

EXECUTIVE SUMMARY Chiang Mai’s condominium market is booming again after more than a decade of stagnation. The city, which is the main business and educational centre for northern Thailand, was a popular location for condominium development in the 1980s and ‘90s, but that growth ground to a halt as a result of the 1997 financial crisis. Recently, however, developers have started to build condominiums there again, and the first five months of 2013 saw the highest number of units come on to the market for the last 17 years. These new units have been sold at prices that are around 11% higher than during the same period in 2012. According to statistics from the Department of Land, there are approximately 18,640 condominium units in Chiang Mai, more than 6,000 of which have been launched in the last two years. Average take-up rate in the first five months of 2013 was around 72%. Because land has been available at a reasonable price in and around Chiang Mai, and because Thais tend to prefer to live in landed developments, condominiums have traditionally not been the most popular form of development in the city. However, Chiang Mai province is home to a large number of universities with more than 100,000 students, for whom buying a condominium is often more attractive than renting an apartment. In addition, Chiang Mai’s economy has enjoyed sustained growth over the last decade, and its close proximity to neighbouring countries means this is likely to continue. Over the last few years a large number of new shopping malls and other retail developments have been built, and there are government plans for several large infrastructure projects that would directly benefit the city, including a second airport; a high-speed railway from Bangkok to Chiang Mai; and a motorway between Chiang Mai and Chiang Rai.

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MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

SUPPLY HISTORICAL SUPPLY BY YEAR, MAY 2013

Source: Department of Land and Colliers International Thailand Research Note: E = Estimated numbers of condominium units expected to be completed in 2013 -2014.

Chiang Mai is the main business city and educational centre of northern Thailand. Many people from around the country move to Chiang Mai for their education, which typically lasts from four to five years. The first condominium project in Chiang Mai City was registered in 1985 and had103 units. More than 13,450 units, or around 72% of the total supply, were built from 1985 to 1996. The effects of financial liberalisation in the country from 1987 to 1995 made Thailand’s economy grow very rapidly, until the financial crisis in 1997. Prior to the crisis, real estate was an “in-style” business in Thailand. Condominiums were the best choice for developers and buyers, and therefore many condominium projects were launched during that period in the main cities of Thailand, including Chiang Mai.

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After the crisis, from 1997 until 2012, only around 3,540 units were added to the market. This was partly because Thais prefer living on landed developments; but more than 1,640 units were completed and registered at the Department of Land in the first five months of 2013. As of May 2013, there are approximately 18,640 units in the market, according to statistics from the Department of Land. Condominiums have not been buyers’ first choice because there is still a lot of land available in Chiang Mai, but after the government announced the development of a high-speed train from Bangkok to Chiang Mai a few years ago, a lot of condominium developers have launched projects in provinces along the development lines, including Chiang Mai.


MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

ADDITIONAL SUPPLY BY YEAR AND LOCATION, MAY 2013

Source: Department of Land and Colliers International Thailand Research Note: Statistics for 2013 are from January to May only.

More than 4,250 units were completed in 1991, the highest number on record, and the number of completed units fluctuated wildly each year from 1992 to1996. From 1998 to 2004, only 1,150 units were completed, due to the financial crisis of 1997. The Chiang Mai condominium market began growing again in 2005 with nearly 500 units completed and more than 250 units added to the market each year since, but this

is still fewer than in the years before the crisis. More than 1,640 units were completed and registered at the Department of Land by May of this year, so the total of newly completed units in 2013 is the highest for the past 17 years.

HISTORICAL SUPPLY BY LOCATION AND YEAR, MAY 2013

Source: Colliers International Thailand Research

The total number of condominium units in the City area is the highest, and the first project there was completed in 1985 with 103 units. In the Outer City area, the first project was completed in 1991. Many developers in Chiang Mai were focusing more on condominium developments for the middle-income group in the City area from 1987 to 1995. After the economic crisis in 1997, the condominium supply

increased slightly in both zones from 1998 to2004 and many condominium projects were completed between 2005 and 2012.More than 1,640 units were completed in the first five months of 2013, the highest number in the past 17 years and possibly the highest on record, as there are many condominium projects scheduled to be completed in the remainder of 2013.

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MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

HISTORICAL SUPPLY BY LOCATION, MAY 2013

Source: Department of Land, Colliers International Thailand Research

The City area has the largest condominium market share with approximately 58% of the total supply or around 10,800 units. In addition, 82% of the supply in the City area was completed before 1997. There are nearly 7,840 units located in the Outer City area and

more than 58% of the total supply in the area was completed before 1997.

CONDOMINIUM UNITS AVAILABLE FOR SALE, MAY 2013

Source: Colliers International Thailand Research

Of the 2,700 condominium units that were available for sale in May 2013, approximately 850 were in the City Area. Nearly 62% of these were launched between 2011 and May 2013. There were around 1,860

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condominium units available for sale in the Outer City area. More than 78% of the total units were launched from 2011 to May 2013.


MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

UNITS LAUNCHED CONDOMINIUM UNITS LAUNCHED FROM 2004 TO MAY 2013 BY LOCATION AND YEAR, MAY 2013

Source: Colliers International Thailand Research Note: Statistics for 2013 are from January to May only.

There were more than 6,000 units launched from 2011 to 2012 and approximately 1,840 units were launched in the first five months of 2013. Approximately 4,260 units or 54% of the total units launched from 2011 to May 2013, are located in the Outer City area, while nearly 3,600 units are located in the City area. Condominium projects in the Outer City area regained popularity in 2013 when there were around 1,000 units launched in the first five months of the year. This was due to increasing land prices, limited available plots of land with reasonable prices in the City area, and the

extension of the road and transport system in Chiang Mai’s Outer City area. The most popular location for condominium development in Chiang Mai is along Khan Klong Chonlapathan Road, in the northwest of the city. During the past one to two years, the Chiang Mai – Lampang Road has become a new residential area. This is due to many local developers launching condominium and housing projects in this area.

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MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

PROPORTION OF CONDOMINIUM UNITS LAUNCHED FROM 2004 TO MAY 2013 BY UNIT TYPE

Source: Colliers International Thailand Research

One-bedroom units make up the majority of condominiums in Chiang Mai, the same as in other locations in Thailand. A one-bedroom unit in Chiang Mai is around 24 – 132 sq m, with an average unit size of

approximately 38 sq m. Most buyers in the area are locals and young people working or studying in Chiang Mai.

AVERAGE UNIT SIZE OF CONDOMINIUM UNITS LAUNCHED FROM 2004 TO MAY 2013

Source: Colliers International Thailand Research

The biggest target group for condominium projects in Chiang Mai is students or young adults working there who prefer to live in a onebedroom unit of their own rather than leasing an apartment. One-bedroom units at some projects are smaller than the average size

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of a studio unit, due to developers designing layouts and preparing the built-in furniture of the unit, so they can reduce the unit size and lower the selling price.


MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

FUTURE SUPPLY CUMULATIVE FUTURE SUPPLY SCHEDULED TO BE COMPLETED FROM 2013 TO 2015 BY LOCATION AND YEAR

Source: Colliers International Thailand Research Note: The year completion is expected by developers

Approximately 740 units are under construction and scheduled to be completed in 2013 in the City area and nearly 1,180 units are expected to be completed in 2013 in the Outer City area. The average number of

units in the projects due to be completed in 2015 in the City area, is approximately 128 units in 17 projects, while there are around 20 projects with around 106 units each in the Outer City area.

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MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

DEMAND TAKE-UP RATE OF ALL CONDOMINIUM PROJECTS IN THE MARKET, MAY 2013

Source: Colliers International Thailand Research

The average take-up rates in both areas are approximately 72%. This is around 5% lower than in the previous year, due to many condominium units being launched in the second half of 2012 and the first five months of 2013. Around 1,960 units, or 48% of the total units in the market, were launched in 2011. The Outer City area shows the best performance with more than 1,760 units being built from 2011 to May 2013. However,

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the average take-up rate is still close to that in the City area. Some condominium projects launched in 2012 by listed developers sold out quickly after the official launch, including dcondo Campus Resort and d’Vieng Santitham by Sansiri Plc. and Supalai Monte @ Vieng Chiang Mai by Supalai Plc. In addition, Sansiri Plc. plan to launch a new condominium project in 2013 which will probably also sell out quickly.


MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

PRICE AVERAGE SELLING PRICE OF CONDOMINIUM UNITS AVAILABLE FOR SALE IN CHIANG MAI, MAY 2013

Source: Colliers International Thailand Research

The average price in 2013 is 35-75% higher than in 2012, depending on location, developers and project concept. The average price of condominium units launched in the first five months of 2013 is approximately THB56,500 per sq m, an increase of around 5% over the average price of condominium units launched in 2012. The average selling price in the City area is 14% higher than in the Outer City area and most of the condominium projects launched in

2013 which have an average price higher than THB65,000 per sq m are located in the City area. Most high price condominium projects are located on Nim Man He Min, Chang Khlan and Charoen Prathet Roads, not far from Chiang Mai old town. The starting prices of some new condominium projects scheduled to be launched in 2013 were higher than THB80,000 per sq m, so the average price in the second half of 2013 and in the future will probably be 5 - 10% higher.

PUBLIC AND PRIVATE DEVELOPMENT PROJECTS IN CHIANG MAI

Chiang Mai is the major business city and main educational centre for the northern part of Thailand, so a lot of people move there for work and education purposes. Chiang Mai’s economy has continued to grow for more than 10 years and has expanded to surrounding provinces. The local administration office is in Chiang Mai and the neighbouring provinces have initiated many public development projects to support the growth and expansion of the provinces. The current government approved a budget for many infrastructure development projects such as a high-speed train from Bangkok to Chiang Mai, tunnel development at some main intersections, and road and tunnel development from Chiang Mai to Mae Hong Son. The local administration office is also planning to propose some new projects to the government for improving their transport system and supporting the tourism market, such as a second airport; a motorway from Chiang Mai to Chiang Rai; a fourth outer ring road; and the Chiang Mai Eye.

In addition, a lot of private developers have launched residential projects and retail centres in Chiang Mai. Many new condominium and housing projects by local and listed developers were launched in the past two to three years. The total residential supply in Chiang Mai, especially Muang Chiang Mai district, has sharply increased. Big name and new retail developers were stepping into Chiang Mai with several categories and project sizes. A lot of retail centres are under construction and are expected to be completed in 2013, especially community malls and shopping malls such as Promenada Resort Mall Chiang Mai, Central Festival Chiang Mai, Platinum Chiang Mai Fashion Center, S-One & SFX Cinema City, The Harbour Community Mall, Maya Chiang Mai, The Chill Park Chiang Mai, Amari Community Mall, Think Park Art Community Mall, L&H Shopping Center, and Star Avenue 3 Viva Terrace Chiang Mai. More than 10 other projects with a total retail space of more than 250,000 sq mare under construction and expected to be completed in 2013.

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MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

OUTLOOK Chiang Mai’s economy has grown over the last several years and it is an educational centre for the northern part of Thailand. There are more than 10 universities and more than 100,000 students in the province, as well as a lot of people who moved to Chiang Mai for their employment. In addition, the government plans to develop a lot of infrastructure in the province and build links to other provinces, such as a high-speed train from Bangkok to Chiang Mai, a second airport, a motorway from Chiang Mai to Chiang Rai to support logistics and a new industrial area in Chiang Khong. Chiang Mai will probably become a main business city for ASEAN, especially for Myanmar, Laos, Thailand and China. The previous Chiang Mai town plan expired in December 2006, so there was no town plan regulating and controlling development and construction from2006 until May 2013. The new Chiang Mai town plan, released in May 2013, affects some locations in Chiang Mai, especially in the City area.

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The average land price in some locations of Chiang Mai increased more than 100% over the past few years, especially on Nim Man He Min and Chiang Mai – Lampang Roads and some other main roads. Most new developments in 2012 and 2013 are in the Outer City area, due to the increasing land prices in the City area. There were some condominium projects launched in 2011 - 2012 and some are planned for launch in the second half of 2013 and next year, most of which are in the Outer City area. This is because developers seem to target the middle-income market in Chiang Mai, not just students or the low-end market in the university zone. The average price of condominium units launched during the first five months of 2013 is around 11% higher than last year. The increase in the minimum wage and logistics costs over the past few years also affected the market.


MAY 2013 | CHIANG MAI CONDOMINIUM MARKET

APPENDIX

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MAY 2013 | BANGSAEN CONDOMINIUM MARKET

ZONING

City Area

Outer City Area

Most condominium projects are located in the City area, especially

The area along the Khan Klong Chonlaprathan Road and Super Highway Road in the Outer City area is the new location for condominium development as it connects directly to the City area. This area starts from the southern side of Road No. 121 in the north and continues on Road No. 121 in the east to Road No. 121 in the south, but excludes all parts of the City area.

along Huai Kaew Road as the universities are located there. The City area includes Chiang Mai’s old town and its surrounding area. This runs from above Road No. 1141 and Suthep Road to the Super Highway and Chotana Road in the north, and Charoenrat Road and Chiang Mai – Lamphun Road in the east.

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MAY 2013 | BANGSAEN CONDOMINIUM MARKET

COLLIERS INTERNATIONAL THAILAND MANAGEMENT TEAM RESEARCH Surachet Kongcheep | Senior Manager ADVISORY SERVICES | HOSPITALITY Jean Marc Garret | Director RETAIL SERVICES Asharawan Wachananont | Associate Director

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RESEARCHER:

RESEARCHER:

Thailand Surachet Kongcheep Senior Manager | Research EMAIL surachet.kongcheep@colliers.com

Thailand Phattarachai Taweewong Senior Researcher | Research EMAIL phattarachai.taweewong@colliers.com

RESEARCHER:

RESEARCHER:

Thailand Wiparut Ruangsombat Researcher | Research EMAIL wiparut.ruangsombat@colliers.com

Thailand Benjaporn Wong-ek Researcher | Research EMAIL benjaporn.wong-ek@colliers.com

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