Condominium markets of Bangkok and Jakarta
News: condo markets in Asia pushing upwards.
Prices of the prime residential market in Jakarta and Bangkok, year on year, are up close to 30%. In Jakarta, the price appreciation is in tune with the rest of the housing market. In Bangkok, prices of luxury condominiums have also been pushed upwards.
The Indonesian condominium market environment
In general terms, the Indonesian condominium market has not seen the need to diversify and take development to the periphery areas. For now, it has been content to focus attention within the city area.
There are several reasons for this trend:
- Despite Indonesia’s fixed ceiling of the Loan to Value at 70%, demand in July did not slacken with positive buyer sentiments continuing to fuel price increases.
- In Q2 of 2012, prices were up 1.2% across the whole of Indonesia, while the condominium market of the Jakarta CBD was up 16.7%
- Companies possessed solid fundamental metrics and exhibited solid confidence in the development market. These favorable business sentiments have in turn helped sustain development activities to continue unabated.
- A new injection of real estate supply has been predicted to take place between now and 2014 and it will be up to developers to ensure that their concept, design and pricing is just right to profit from the projected increase in demand.
The condominium market environment in Thailand
The market situation for condos in Thailand is different from that prevailing in Indonesia. The former has opted to develop the periphery areas in order to flee the congestion of the Bangkok city area where floor space is premium priced.
The market conditions in Thailand are different from those existing in Indonesia:
- Overall demand is tending towards outstripping supply and developers are shifting their sights on other resort destinations that have better demand and supply prospects. Such areas include Phuket, Pattaya and Hua Hin.
- In Bangkok, buyers tend to prefer condominiums in the city area where high demand for luxury condominiums in the heart of Bangkok is at the forefront.
- Supply is very tight and has been aggravated by the launching of only a few projects this year, which will curtail the availability of more floor space.
- Given these constraining factors, the condominium market is expected to polarize between city center and periphery locations.
- In the city, supply will continue to be limited, giving rise to an uptrend in prices. For the latter, significant new supply of floor space will soften any radical price appreciations.
Despite differences in logistical locales and direction in condominium development in the two markets, there are certain advantages that can be attached to both especially from a local point of view. Both are developing according to existing local conditions and customer preferences and no doubt both markets will continue to provide investment opportunities for prospective investors. Both look attractive enough, whether investments are in the hub of Jakarta and Bangkok or along the peripheral areas of Thailand.