Soft demand in the condominium market, a high rejection rate for mortgage applications among middle- to lower-end buyers and a decrease in high-priced housing supply have driven developers to shift to luxury single detached houses.
Therdsak Thaveeteeratham, executive vice-president for the research division at Asia Plus Securities Co, said many SET-listed developers have diversified to launch more single-house and townhouse projects since last year, after seeing weak demand in the condominium market.
"Condo demand has dropped. There is no more selling out in one hour or one day," he said. "Developers saw the signs last year and shifted to single houses and townhouses. Anyone focusing on condos-only knows it will be riskier."
According to research by Asia Plus, the total value of newly launched low-rise (single house, townhouse and duplex house) projects by 16 SET-listed developers has picked up since last year after a drop during 2015-16.
This year the total value of new supply in the segment will set a new record at 246 billion baht, soaring from 140 billion in 2017, 128 billion in 2016, 142 billion in 2015 and 150 billion in 2014, Asia Plus said.
The total value of new condo supply being launched by 16 SET-listed developers will rise by 11% this year to 219 billion baht from 197 billion last year, which was 56% growth from 126 billion in 2016.
Therdsak: Shift to single houses
"A rise in the domestic interest rate, which will likely start in the third quarter, will hurt some condo buyers who buy to rent out for a yield, as it will be less attractive to use a loan to buy," Mr Therdsak said. "The gap between profit and cost will be thinner."
However, not all pricing levels in the low-rise market are strong enough for developers to tap into, he said.
"Developers switched to low-rise houses, but specifically the middle- to upper-end segment, as the lower end of the market still sees a lot of mortgage application rejections," Mr Therdsak said.
Aliwassa Pathnadabutr, managing director of property consultant CBRE Thailand, said the market trend for luxury houses this year is a shift to locations in outer Bangkok, away from the downtown.
"Buyers found that luxury single houses or townhouses in inner Bangkok locations did not meet their requirements," she said. "They need ample space, and units in the inner city have limited area because of scarce plots and high land prices."
In the second half, at least five new luxury single-house projects worth a combined 5 billion baht are scheduled to be launched. All of them are located on the outskirts of Bangkok.
Two are in the Krungthep Kreetha area, from SET-listed Major Development Plc and non-listed Koon Estate Co.
One is in the Kaset Nawamin area from SET-listed Singha Estate Plc, with units priced from more than 100 million baht. Two are from SET-listed Charn Issara Development Plc in the Bang Na and Rama IX areas.
"Luxury single detached house buyers remain the same customer base, but they have different lifestyles," Ms Aliwassa said. "Those buying a unit in the inner city do not mind the plot size, but consider location and usable space, while those buying on Bangkok's fringes look for a large plot with facilities."
She said buyers in this segment include those wanting to expand family housing or relocate from old existing houses. Many are newly rich entrepreneurs.
Phattarachai Taweewong, senior manager in the research department at property consultant Colliers International Thailand, said the super-luxury house segment, with units priced from 40 million baht in Greater Bangkok, has emerged since 2013.
Aliwassa: Trend is to the outskirts
There are 30 projects with a total of 917 units that fall into that category. Those situated in inner Bangkok locations, including Sukhumvit sois 31 to 63, are small-scale projects with no more than 10 units each.
In Bangkok's outskirts, most are in western zones such as Ratchaphruek, Pin Klao and Rama II, or northern areas like Kaset-Nawamin, Lat Phrao-Wang Hin and Ram Intra.
Of the total supply, 95% or 870 units were single detached houses. Some 3% or 27 units were townhouses and 2% were duplex houses. The sales rate was 57%, or 520 units sold.
This year's new supply in the luxury low-rise market will total more than 15 billion baht. Players include familiar names such as Sansiri Plc, Golden Land Development Plc and Charn Issara Development Plc.
New faces include Singha Estate and K.E. Land, which plan to launch units with the highest prices in Bangkok, at 400 million baht and 300 million, respectively.
"The sales rate each year in the luxury low-rise market is not so high, but purchasing power remains strong because buyers are not affected much by the economic situation," Mr Phattarachai said.
Market research by SET-listed Golden Land Property Development Plc found that luxury single detached houses in Greater Bangkok (units priced from 20 million baht) were mostly in Bangkok's eastern zone.
At that location, there are six projects with a total of 739 units from four SET-listed developers. Three sites with 190 units are from SC Asset Corporation, while Land & Houses has one project with 371 units. Golden Land has 77 units, while Sansiri has 101.
In the Pin Klao-Ratchaphruek area, one of the most popular locations for luxury single houses, supply totalled 597 units from seven projects worth a combined 13 billion baht.
Wirat Monjaroenporn, Golden Land's managing director for single detached house project development, said luxury house buyers in the Pin Klao area are typically aged 45 and above, live in Phutthamonthon Sai 4-7, own a factory or business, and have a family with at least three members.
They earn an income of 5 million baht a month and usually have savings of at least 10 million baht, he said.
Buyers in this segment might take longer to decide, but they make fewer site visits before deciding to buy, Mr Wirat said.
"Key factors they consider are location, functionality of the unit and facilities in the project, then price," he said, adding that buyers in western zones like Pin Klao usually spend comparatively less because they made their fortune themselves.
Chainid Adhayanasakul, chief executive of SET-listed Property Perfect Plc, said the company aims to be a market leader in the luxury housing market because such buyers have strong purchasing power.
"We are planning strategies to tap this segment through a joint venture with Sekisui," Mr Chainid said. "We will launch luxury houses with new designs and the latest technology in five locations next year."
Three of the projects will be in Bangkok's eastern zone, including Sukhumvit Soi 77, Ramkhamhaeng and Krungthep Kreetha, with the other two in northern areas, Chaeng Watthana and Rattanathibeth.
On June 12, Property Perfect signed a joint venture agreement with Japanese building materials producer Sekisui Chemical Co to develop single detached houses with units priced at 20-100 million baht.
In May 2018, Property Perfect partnered with Hong Kong-based property investment group Hongkong Land Ltd to develop two luxury single detached housing projects worth a combined 10 billion baht, expected to launch next year.
Through both foreign partners, Property Perfect aims to double presales of luxury single houses to 4 billion baht in the next few years from 2 billion last year.
