A premium real estate agency founded in 2013, Sense Property Group is committed to offering top-notch service to global customers. With a single agency in the inner center of Bangkok, Thailand, where the demand from foreign investors and expats is strongest, the boutique real estate agency focuses on the high-end of the residential market.
Working as a five-person sales team, the firm also serves Koh Samui, Phuket, Hua Hin, Chiang Mai and Pattaya through a network of experienced and reputable foreign brokers. Here, Co-Founder Bastien Forzy discusses the current state of the market in Thailand.
Tell us about the types of properties in your market and which are most popular.
Bastien Forzy: Over 95 percent of our sales involve condominium units, which are the only type of property that foreigners can purchase “freehold,” i.e., without restriction of rights or time. Freehold condos can even be transmitted to the owners’ heirs. Foreigners (either individuals or companies) began purchasing freehold condos in Thailand in 1992 when the Condominium Act was passed, allowing them to purchase condominium units in the limit of 49 percent of all built-up units per condominium-registered residence.
Please describe your current housing market.
BF: As of Q2 2018, there were approximately 240,000 condominium units in Central Bangkok, of which 20 percent belonged to foreigners. To fully understand the local condominium market, one must make the distinction between the new sale and resale market. In looking at the new sale market, the average transaction price of new homes (condominium units) in Central Bangkok was 280,000 Thai Baht (THB) per square meter in Q1 2018, with notable discrepancies between the very top of the market (super-luxury condos go up to 600,000 THB/sq. m) and the Grade-A market entry (around 250,000 THB/sq. m). Even more significant is the gap between the newest and oldest properties on the resale market, where the oldest- and lowest-end condos in Central Bangkok can trade as low as 60,000 THB/sq. m, 10 times lower than the most expensive properties. This 1-to-10 price scale is one of the main features of Central Bangkok’s condo market, a source of immense opportunity for smart buyers who are being advised by knowledgeable brokers.
It’s also important to note that new sale prices in Central Bangkok have increased by 150 percent between 2006 and Q1 2018, representing a 12 percent increase per year. Resale prices have increased at a slower pace, with an estimated yearly increase of 4-5 percent over the same time period.
What types of buyers do you work with?
BF: Our focus has always been—and will continue to be—on foreign investors, where we have a strong added value in the very competitive market of property brokers, which isn’t yet regulated (no license needed). While more than 80 percent of our sales have been to foreigners or Thai citizens of foreign origin, sales among Thai clients were almost exclusively Grade-A to super-luxury condos, in addition to some houses and land, which can only be purchased by Thai nationals. That being said, our population of foreign buyers is a good mix of residents and non-residents. Although Westerners have historically been our main clientele, we’ve seen a strong increase in demand from China, Hong Kong, Taiwan and Singapore, all countries where cash is plentiful and where the Bangkok market looks particularly attractive in comparison to their local markets. As we continue to develop our visibility and business with Westerners, we’re also investing considerably to extend our focus to the Asian market.
What are some of the most important trends in your market?
BF: One significant trend is increasing land prices and demand for high-end properties, which is leading to an increase in condo prices, a shift to luxury developments and shrinking property sizes. In fact, more than 60 percent of all new units since 2012 are studios or one-bedroom units. We’re also seeing a renewed interest for older units that offer a larger living space, more bedrooms, real balconies or terraces and larger facilities in the heart of Bangkok, which is opening up considerable opportunities for buyers willing to redesign their units.
In addition, there’s been a strong increase in the number of Chinese buyers, who now account for 60-70 percent of all new buyers in Central Bangkok. Sukhumvit has become the main center of attraction for foreign investors, especially around the Phrom Phong and Thonglor areas, famous for their unique malls and endless dining and shopping options. More than half of all new high-end projects in Central Bangkok are located in the Sukhumvit area. Lastly, we’ve seen an extension of Central Bangkok to the riverside area, with various high-end condo projects being built. This will also be the future home of the largest luxury shopping mall in town.
What are your biggest challenges/opportunities for growth?
BF: In addition to the shortage of quality properties matching foreign standards (for example, properties with two bedrooms or more), there’s a lot of uncertainty within the market as we anticipate the next financial crisis occurring sooner than we thought, which may cut foreign investments and work permits for expats. In addition, the lack of transparency and professionalism in the local brokerage market is undermining the confidence of numerous potential buyers who favor more mature markets, such as those in the United Kingdom, the United States and Australia.
Another challenge that we’re currently facing is the fact that with Chinese investors, trust is everything; in fact, they’ll only work with a Chinese agency or at least one that has Chinese-speaking staff and proven experience with Chinese buyers. Finding the right staff is a challenge in our market, especially with the ever-increasing salary expectations and limited loyalty. That being said, penetrating the massive Chinese market is a difficult and costly process, but one with potentially huge returns.
How does being part of Leading Real Estate Companies of the World® help advance your business?
BF: LeadingRE is a fantastic label of professionalism and quality of service. Only a limited few are elected to be members, and this is key to the recognition of this label and the development of the network.
Although we only became a member in March 2018, we’ve already had the chance to meet with a number of other founders and directors of member companies. Being a member of LeadingRE allows us to work with the best partners, and this is absolutely key for our clients’ satisfaction. Lastly, LeadingRE is open to ideas and suggestions from its members to improve the network to meet the unique needs of its members and penetrate new markets. This opens unique opportunities for an agency like ours.
For more information, please visit https://senseproperty.com.