Location, location isn't everything, property study finds

Property developers must identify the key factors driving market demand, as homebuyers are demonstrating that location is no longer the overriding concern, the SCB Economic Intelligence Centre (SCB EIC) says in a new study.

The centre advised developers to find ways to add value to properties as the market heads toward saturation.

According to the study, conducting a hedonic pricing analysis can help to identify features homebuyers are willing to pay for in residential property. SCB EIC collected and analyzed information on 90 single detached housing, 80 townhouse and 75 condo projects including location; distance to rapid transit; size; and amenities.

By some estimates, residential property transactions in the Bangkok area accounted for nearly 70 per cent of property transactions in Thailand, in terms of value, in 2009.

The study found that homebuyers' preference is shifting from single detached houses to condos and townhouses across most household types, in line with changes in the living habits of Thai families.

A majority of the Thai population the figure is expected to be just under 70 per cent in 2020 will continue to reside in rural areas and smaller towns, according to the study. While overall population growth is slowing sharply, what growth there is will tend to occur outside the larger urban centres. As a result, much of the demand for housing in terms of units will occur in rural areas and smaller towns. In value terms, however, Bangkok and its vicinity will continue to dominate, accounting for more than 80 per cent of housing demand.

In unit terms, SCB EIC expects annual demand growth in Bangkok to average about 4.7 per cent over the next 10 years, down slightly from the approximately 5.4 per cent recorded between 2002 and 2007. Annual demand growth in the large urban centres outside Bangkok (including Phuket, Chiang Mai and Nakhon Ratchasima) is expected to average about 6 per cent.

Demand for condos is being driven by changing lifestyles and household types, whereas demand for single detached houses is largely a result of growing incomes. While growth in the market for townhouses should slow significantly in Bangkok, SCB EIC said, it is expected it to outstrip other segments elsewhere Bangkok.

By bperry
From : By The Nation : August 3, 2010