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year end 2010 | Condominium

thailand

Bangkok Condominium Market REPORT

Bangkok Condominium Market Executive Summary New launches in Q4 2010 continued to surge on the back of continued confidence in the residential market and affordable units being offered by developers. Overall 2010 represented a landmark year for the condominium market with over 60,000 units being launched in total. 2011 is set for another strong year for condominium launches but is then expected to moderate and a supply bubble is likely to be avoided as developers and authorities pay close attention to the market and its constraints. This year will represent a move from boom to consolidation. market indicators 2009 - 2010 Supply LAUNCHES PRICES TAKE-UP

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Developers are dividing their attention to both urban and suburban Bangkok, with a similar number being launched in both areas. Suburban Bangkok still remains firmly on the radar with listed developers targeting the low to mid end segment of the market, however non-listed developers are fighting back in Q4 2010 with many players launching smaller scale projects thus providing healthy competition in the market. Issues regarding transport access to mass transit stations mean that the positive effects of these lines is not being fully realized and could be a problem for future new lines.


Bangkok condominium Market REPORT | Q4 2010 Newly launched condominium units during the year 2009 – Q4 2010 by quarter

Source : Colliers International Thailand Research

Newly launched units in the fourth quarter of 2010 slightly decreased from Q3 2010 by 2,500 units. Approximately 20,000 units were launched in Q4 2010. Many launches were put on hold due to the protests in Q2

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but were resumed in Q3 and then continued forwards for Q4 2010. The total number of newly launched units in 2010 was approximately 61,000, a nearly 80% increase from 2009.


Bangkok condominium Market REPORT | Q4 2010 ZONING HISTORICAL SUPPLY BY YEAR

cumulative supply in Bangkok

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Bangkok condominium Market REPORT | Q4 2010 • CITY AREA

• OUTER CITY AREA

The area covers four adjacent but competing sub-markets: the Sukhumvit section comprising Sukhumvit Road between Soi 1 and Soi 55 to the north and Soi 2 and Soi 38 to the south; the Central Lumpini section including Phloen Chit Road, Rama I Road, Soi Langsuan, Soi Sarasin, Chitlom Road Ratchadamri Road, Witthayu Road and Rachaprasong Road; the Silom / Sathorn section; and the Riverside section fronting the Chaophraya River along Charoenkrung Road and Charoennakorn Road, where several five-star hotels are located. The City Area is convenient for businessmen, expatriates and tourists, because of its proximity to many office buildings, retailing and local attractions.

The area covers two parts of Bangkok:

• CITY FRINGE AREA This area covers three parts of Bangkok: o Northern Fringe: This section covers the BTS route starting from Ratchathewi Station to Mo Chit Station to the north and the MRT route starting from Petchaburi station to Bangsue station to the north. o Southern Fringe: This section covers Narathiwad Ratchanakarin Road, Chan Road, Sathupradit Road, Charoenkrung Road and Rama III Road along the Chaophraya River. o Eastern Fringe: This section covers the BTS route starting from Thong Lor Station to On Nut Station to the east, Rama IV Road and Petchaburi Road,

o Outer City (East): This section starts from the extension of the BTS route at On Nut Station to the Bangkok boundary to the east. o Outer City (West): This section starts from the extension of the BTS route at Taksin Station to Bang Wa station which includes the area from Krung Thonburi Road to Ratchaphruek Road near Petchakasem intersection.

• SUBURBAN BANGKOK These are the environs outside the areas already mentioned. Expansion of the mass transit system is the main determinant for increasing future supply in a particular area. The expansion from On - Nut to Samut Prakarn is scheduled to be completed in 2011. The expansion of the BTS will benefit directly the surrounding condominiums, as it will considerably reduce transportation costs and time. This will encourage the development of new condominiums in this area. Suburban Bangkok represents the biggest area and for the purposes of this report includes Bangkok city old town (Koh Rattanakosin area and boundary area). This location has comprehensive town planning controls restricting building height, so there are no condominium projects in the area.

This area covers locations with their own local infrastructure and convenient transportation but require commuting to have access to the central business and entertainment areas. Newly launched condominium units in Q4 2010 by location

Source : Colliers International Thailand Research

In Q4 2010 the suburban Bangkok area slightly trumped urban Bangkok with the higher number of units launched. Within urban Bangkok, the Eastern Fringe area has shown the highest numbers with approximately 3,500 units, a nearly 31% increase from Q3. The Northern Fringe came very close second.

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LPN Development Plc. launched the “Lumpini Park Riverside Rama 3”, a new riverside condominium project on Rama 3 road in the Southern Fringe area with a total of 2,405 units and this was the largest project in this quarter and for the year as a whole.


Bangkok condominium Market REPORT | Q4 2010 A comparison of newly launched units by listed companies and non listed companies during Q1 2009 – Q4 2010

Source : Colliers International Thailand Research Remark : Listed companies include subsidiaries

In Q4 of 2010 listed companies still served up the largest share of newly launched units, although the number of newly launched units by non listed companies increased from Q3 by approximately 1,300 units meanwhile newly launched units by listed companies decreased by nearly 2,400 units. The newly launched units by non listed companies

this quarter is the highest of the past two years. Many are smaller in scope than those put on the market by the listed developers but lesser known developers are once again dipping their toes into the condominium pond.

Newly launched condominium units in City Area, Q1 2009 – Q4 2010

Source : Colliers International Thailand Research

More than 2,500 units were launched in the City Area for Q3, but in the last quarter of 2010 just 400 units were launched. The limited number of launches in the first half of the year was a direct consequence of the

protests which began in February 2010 but was ratcheted up in April and May. This delayed launches to Q3 2010.

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Bangkok condominium Market REPORT | Q4 2010 Newly launched condominium units in Northern Fringe Area, Q1 2009 – Q4 2010

Source : Colliers International Thailand Research

Newly launched condominium units in the Northern Fringe area dramatically increased to more than 4,300 units in Q3 and approximately

3,300 units in Q4.

Historical Supply

supply of condominium units 1994 - 2010

Source : Department of Land, Colliers International Thailand Research Remark : The number of units does not include projects from the National Housing Authority

Only approximately 6,000 new condominium units were completed and registered at the Department of Land in Q4 2010 and the total number in 2010 was approximately 24,700 units, which represented a fall from

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2009 of nearly 15%. This decline is a reflection of the onset of the Global Financial Crisis which led to developers putting plans on hold and this is now affecting the figures for new supply.


Bangkok condominium Market REPORT | Q4 2010 Total Historical Supply by Location to Q4 2010

Source : Department of Land, Colliers International Thailand Research

Around 66% of total condominium units are located in the suburban Bangkok area with a total of more than 190,000 units. Within the urban Bangkok area, the Northern Fringe contains the most units due to its

proximity to the centre, mass transit connections and relatively lower land prices compared to the City Area.

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Bangkok condominium Market REPORT | Q4 2010

Additional supply per quarter | City Area, Q1 2009 – Q4 2010

Source : Colliers International Thailand Research

Approximately 770 units were added in Q4 2010 and so total supply in this area amounted to around 23,000 units. Roughly 6,600 units are

scheduled to be completed in 2011.

Additional supply per quarter | Northern Fringe Area, Q1 2009 – Q4 2010

Source : Colliers International Thailand Research

Approximately 2,600 units were added in Q4 2010, a significant addition from just over 500 in Q3. This area still remains the main target for condominium projects in the near future, especially Phahonyothin,

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Ratchadapisek, Ari and Sutthisan Road. The Northern Fringe contains a significant number of BTS and MRT stations, the key public transportation arteries in Bangkok.


Bangkok condominium Market REPORT | Q4 2010 Future Supply – Urban Bangkok Cumulative future supply scheduled to be completed during the year 2011 – 2013 by location in urban Bangkok. (As of Q4 2010)

Source : Colliers International Thailand Research Remark : Supply does not included unit in Suburban Bangkok

Approximately 25,000 units are scheduled to be completed in 2011. The Northern Fringe area continues to be the main player in urban Bangkok with approximately 10,700 units scheduled to be completed in 2011 and

followed by the City area with a total number of around 6,700 units. It is expected that the Northern Fringe will continue to dominate supply for the early part of the decade in urban Bangkok.

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Bangkok condominium Market REPORT | Q4 2010 Take up Sales proportion of newly launched units in Q4 2010 by location

Source : Colliers International Thailand Research

The average take up rate of newly launched condominiums in 2010 was around 56% representing a decrease from 61% in 2009. Considering the number of units launched for 2010 this number is still a robust one. The occupancy rate in the Southern Fringe area was the highest followed by the City area and Outer City - East area. The positive figures for the Southern Fringe are the result of a popular newly launched project from LPN Development in the Southern Fringe area. The progress of the On

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Nut-Bearing extension line spurred take up in the Outer City- East area. In the fourth quarter the Bank of Thailand introduced measures to control the condominium market, with a loan-to-value of 90 percent of new condominium units below 10 million baht as of January 1 of 2011. This new policy had a positive effect on the market in Q4 of 2010, because buyers were more likely to make a decision to buy by the end of the year.


Bangkok condominium Market REPORT | Q4 2010 Average sales proportion of newly launched units in 2010 by location

Source : Colliers International Thailand Research

The average take up rate for newly launched condominium projects in Bangkok in the year 2010 was approximately 56%. The take up rate in the Northern Fringe area is the highest followed by the City area and suburban Bangkok area. Various factors explain the high numbers for the

Northern Fringe. Many BTS / MRT stations are located in this area and the selling prices are still lower than other areas along mass transit line, such as Sukhumvit, Silom, Rajadamri and Phayathai Road.

Launches with high take up rates in Q4 2010 Onyx Phahonyothin by Sansiri Plc. showed the highest take up rate of almost 100% of its 620 units with a selling price of more than 90,000

baht per sq m. Unit area starts from 25 sq m for a studio unit up to 67.5 sq m for 2 bedroom units. The project is located on Phahonyothin Road approximately 550 meters from BTS Saphan Kwai Station.

Regent Home 13 Sukhumvit 93 by Regent Green Power Co., Ltd. is located in Sukhumvit soi 93 with a total of 270 units in the Outer City – East area and had one of the highest take up rates. The building contained only studio units at just 31 sq m with a selling price of lower than 1,000,000 baht per unit.

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Bangkok condominium Market REPORT | Q4 2010

Take up rate in proximity to existing mass transit lines Q4 2010

Source : Colliers International Thailand Research

The take up rate of projects 501 – 1,000 meters from BTS / MRT was highest at around 60% and similar to the area more than a kilometre from the BTS/MRT. While access to mass transit remains a strong

magnet for buyers, the selling price is also higher than other areas, so many buyers are more interested location 501 – 1,000 meters from a mass transit station which represents more affordable units.

The Average takes up in proximity to existing mass transit stations in the year 2010

Source : Colliers International Thailand Research

The take up rate of condominium projects within 200 meters of mass transit stations came close to 72%, a high figure considering the relatively higher prices. However projects located 201 – 500 meters from BTS / MRT lines showed the lowest rate of around 41%. This figure is due to many projects being located away from the main road, sometimes in out

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of the way sois and poor feeder systems but with selling prices still high or similar to projects located on the main road or nearer to BTS / MRT lines. Projects located further than 1,000 meters came second at nearly 65% due to the lower selling price of projects.


Bangkok condominium Market REPORT | Q4 2010 Initial Launch Prices Average selling prices of newly launched projects Q1 – Q4 2010

Source : Colliers International Thailand Research

The average selling price in the City area is still highest at nearly 110,000 Baht per sq m, and the average selling price in Q2 and Q4 was higher than 100,000 Baht per sq m. The Outer City –West is the area along the

new BTS extension line and many projects in this area are high-end ones, therefore the average selling price is higher than other areas.

Launch prices : Mass Transit Effect Selling prices of newly launched projects by proximity to mass transit lines (BTS and MRT), Q1 - Q4 2010

Source : Colliers International Thailand Research

The average selling price in the City area is still highest at nearly 110,000 Baht per sq m, and the average selling price in Q2 and Q4 was higher than 100,000 Baht per sq m. The Outer City –West is the area along the

new BTS extension line and many projects in this area are high-end ones, therefore the average selling price is higher than other areas.

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Bangkok condominium Market REPORT | Q4 2010 Mass Transit – The draw and the drawback In a survey in the Journal of the Eastern Asia Society for Transportation Studies, Vol.8, 2009 called “Influences of Paratransit as A Feeder of Mass Transit System in Developing Countries Based on Commuter Satisfaction”, commuters to On Nut BTS and Huay Khwang MRT were asked various questions regarding how they access the stations. Fifty five percent of those living within one kilometre of a station walk to the station while 30% take motorbike taxi and 10% take a bus or songtaew. Within 200 metres a walk does not offer much discomfort in regards to the heat, however after this distance a walk becomes more onerous and the appeal of a motorbike becomes much stronger. In the same survey users of this mode of transport were dissatisfied with the cost as well as safety and weather protection. This likely accounts for the reduced effect on pricing after 200 metres from the mass transit stations. In general terms the feeder systems to the mass transit stations are considered poor with a low satisfaction in the survey with the waiting times, poor scheduling, en-route stops and the comfort of songtaews. This means that little pricing premium results from locations further than 200 meters and therefore mass transit lines are not making the most of their infrastructure.

Trends In the year 2010 listed developers are focusing more in the suburban Bangkok area and lower mid range market In 2009 listed developers and their subsidiaries accounted for around 18,000 condominium units launched in Bangkok but in 2010 more than 41,000 units were launched representing an increase of 122%. Just over half of the total units of listed developers were located in suburban Bangkok where the selling price is lower than 3 million baht per unit. This was the result of listed companies setting up new brands to focus on the growth in the lower – mid range market and most of these are located in the suburban Bangkok area due to lower land prices. This situation may affect non listed companies penetrating the market in the near future, as projects from a listed company can be more attractive to buyers with usually better financing options and brand strength. However smaller developers are fighting back with smaller scale projects.

New Policies from Bank of Thailand to control the condominium market The Bank of Thailand introduced measures to control the condominium market in the last quarter of 2010, with a 90 percent loan-to-value limit on new condominium units below 10 million baht as of January 1 of 2011. The Bank of Thailand’s policies will affect to the decision of the buyers in 2011, as they need to have at least 10% of total value whereas in 2010 some commercial banks provided 100% loans with zero down payment,

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this will also affect small and medium sized developers, due to the reduction in the purchasing power of buyers. The gradual increase in interest rates is also likely to act as a dampening on condominium launches going forward.


Bangkok condominium Market REPORT | Q4 2010 Financing Housing Loans for Personal Consumption Extended by Financial Institutions

Source : Bank of Thailand and Colliers International Thailand Research Note: Excludes negligible amounts of financing from other sources. Percentage change is comparable quarter to quarter.

The growth rate of housing loans increased more than 3% in Q3 2009 – Q1 2010 because of the government’s incentives attracted buyers to purchase and transfer by the second quarter of 2010. This boosted

housing loans in that period compared to other periods. The amount of loans continues to grow but at a more sustained pace.

The luxury condominium market Luxury condominium units launched during Q1 2009 – Q4 2010

Source : Colliers International Thailand Research

Sansiri Plc launched a new project with approximately 140 units located on Sukhumvit road but newly launched luxury condominium units

dropped from Q3 by around 80%. This market segment continues to be a bit player in the overall condominium market.

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Bangkok condominium Market REPORT | Q4 2010 Forecast Strong concerns about the booming condominium market continue in the midst of more planned launches of condominium developments over the coming year. Most developers do not launch on a whim but rather study the demographics and income levels in regards to future demand for their products. As such it appears that target markets remain in various income categories, especially the lower levels that have only recently been tapped in earnest. The city continues to grow along with average incomes and for the foreseeable future a market will exist for particular products. Take up will slacken as buyers take their time in choosing a place to live. The days of one day sell outs are behind us which points to a more mature market for lower end condominium units. The frenetic pace of launches will lessen over time but the condominium success story has a long way to go. Mass transit remains a key factor to attract the developers and buyers. The Ministry of Transportation has announced a master plan of BTS extension lines covering the Bangkok Metropolitan and vicinity area.

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Although there has been no tangible progress on some lines, many property developers are already scrambling to occupy land along planned lines and are scheduled to develop projects or starting progress along the more advanced Purple Line (Bang Sue – Bang Yai) and the Green Line (Wongwian Yai – Bang Wa). The issue confronting developers is how to make projects relatively close to mass transit lines more attractive to buyers using improved ways for residents to access stations from their homes. Regular, comfortable and affordable paratransit (from home to mass transit station) would be the best way for this to happen. Developers should consider retail/transport hubs on station locations connected by efficient bus feeder systems or even a light monorail as has been suggested by one developer.


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Bangkok Condominium Market Q4-2010