Purchasing a condominium unit as a long-term investment is emerging as an interesting investment option in light of political and economic uncertainties, the falling interest rates, the downturn of the stock market and the falling yields of government bonds, according to international property consultants CB Richard Ellis.

According to the latest survey conducted by the Bangkok research team, the total stock of existing condominiums in Bangkok was 48,128 units, as of the first quarter of 2007, an increase of 9.53% or 4,188 units. This figure can be sub-divided by area, with 21.4% in the Central Business District (CBE) area (Silom, Sathorn and Suan Plu Roads), 4.4% in Central Lumpini (Wireless, Ploenchit, Langsuan and Rajdamri Roads), 34.6% in Sukhumvit (Sukhumvit Soi 1-63 and Sukhumvit Soi 2-44), 8.2% in Pathumwan (Phayathai and Phaholyothin Roads), and 29.6% in Riverside (Rama III, Charoen Krung and Charoen Nakhon Roads).

Based on the latest survey by the CB Richard Ellis Research team, in 2005, there were 1,788 newly launched units positioned at the luxury and high-end of the market while there were are 1,097 newly launched units in 2006, representing a significant decrease of 38.6%. In 2007, it is expected that there will be a similar number of new luxury and high-end condominium launches as in 2006. CB Richard Ellis recommends that buying a luxury condominium unit is a good investment option as there will be limited supply in the future.

According to Ms. Aliwassa Pathnadabutr, Managing Director of CB Richard Ellis Thailand, "Luxury and high-end condominium units in downtown Bangkok have been attracting a huge amount of interests from long-term investors even though the market has slowed down as a result of the political and economic situation. However, over the past few years, long-term investors who make profits from reselling or earning rental income from their units have remained keen to purchase condominium properties in Bangkok because of their understanding and confidence in the market. Based on their experience, they are satisfied with investment returns in the form of capital appreciation and rental yields of 5-7%, which is higher than the current deposit account interest rate of 3.5%."

Ms. Aliwassa added, "Although the growth in sales has been slowing since late 2006, CB Richard Ellis found that completed luxury condominium units which are located in such prime locations as Saladaeng, for investment purposes, continue to generate good sell-out prices. There has also been demand from long-term investors who are seeking to purchase good quality condominium units. However, these condominium owners do not wish to resell as they see high potential in their units. This frequently occurs among quality projects in prime areas as it is increasingly difficult to find good land plots, especially along the mass transit systems, which is resulting in difficulty in developing new projects."

Investors in the luxury and high-end markets are not concerned about their finance, but now they lack confidence in the market due to several negative factors in the political scene, the economy and in society. However, if the government initiates measures to support and increase confidence in the market, CB Richard Ellis believes that those investors will re-enter the market quickly, which will be reflected in sales and transfer rates. Those measures stimulating the Bangkok condominium market should include the reduction of the Specific Business Tax, transfer fee and an increase in the foreign ownership quota from 49% to 70%. The stimulus should also be activated in all market segments in order to inject new capital into the market.

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