Monday, November 22, 2010

Small is Beautiful

In Bangkok, land prices have been sky-rocketing unproportional to the income of the residents here. This is a big city, that witness hundreds of thousands of migrant workers descending here to eke out a living each year. The Thai economy is pretty much centralized in Bangkok. Hence, the population has balooned to around 10 million, almost one fifth of the total population.

How does one then price their properties within the reach of the ordinary Thai white collar wage earner? An average 25yo undergraduate with 3 years work experience earn between RM1500 to RM2000/month. They earn much more if they speak English but not many do. So realistically, developers price their products to within RM100k to RM150k to suit the budget. At the same time, they need to place their projects within prized locations along major bus or commuter train routes. By doing so, they reduce the size as much as they can until they perfected the art of building small studio units.

In KL, we are now just about getting used to 500sf or even 400sf studio units. In Bangkok, they get down to as low as 250sf!

Developer LPN does a great job at this. LPN specializes in small affordable units that are located within 1km to 2km radius of the Bangkok MRT or BTS stations. They have a great reputation at providing excellent maintenance despite the cost of their products. However, they also churn out pigeon holes, barrack style apartments numbering thousands in each project. Yet, their product sell like hot cakes, snapped up within hours of being launched. Many purchasers are migrant workers from upcountry tired of renting or executives with families in the suburbs but work in the city and no doubt a great number of cash rich Thai speculators.

However, these properties generally don't appreciate much, although the past couple of years a typical 320sf unit (unit plan below) launched at RM120k is now in the sub-sale at around RM200k. Rental for a fully furnished unit is between RM1000 to RM1200 for good locations.

Despite the long school corridor style, LPN has done a great job with the unit layout and design which incorporates Asian life-style. Unlike the studio apartments peddled by developers in Malaysia, Thai developers like LPN design the kitchen for Asian cooking i.e. it faces outwards to the window.

This well thought out design are also now being adopted by higher end condo projects, with developers like Sansiri, Preuksa and AP joining the fray. One of Thailand's best developers, Preuksa has launched a very good concept development in Suan Phlu, equivalent to our Ampang Hilir in KL with a starting price of 250sf studios at RM180k. Notice the small kitchen with a sliding door and balcony similar to LPN's design.

Of course, Preuksa being a higher end player has larger units, priced at a higher premium at RM300k for a 350sf 1-bedroom unit up to RM600k for a 2 bedroom unit. Preuksa also offers laminated wood flooring and quality hotel-grade bathroom fittings for all their units, including the el-cheapo studios.

Another high end developer, AP Land has another innovative concept which they call the "sky kitchen". It is basically putting the kitchen at the window instead of at the back near the door like most studio layouts we are used to. With prices starting from RM300k, AP Land's designs are 1-bedroom units, not studios. Usually in a 1-bedroom unit, the bathroom and toilet is situated inside the bedroom or outside. Both ways are inconvenient as you either have to step outside or guests have to step inside your room to use the facility. So, they have designed the toilet and the bathroom to be separated by a door, accessible from both the room and the living room. In this way, you can be having a shower and your guests can be using the toilet at the same time... no funny thoughts...

While we are still enjoying large 500sf to 600sf studio or 1-bedroom units in KL, I still can't find any innovativeness by our developers to make that a truly living concept like what the Thais have done. Small can be beautiful.


Trevor Wong said...

Great post... thanks.

Anonymous said...

these are call MMC
Mickey mouse condo

Ryan said...

Nice post. But foreigners buying Thailand properties face a number of restrictions. Looking at the prices/rental and financing factors, does it seems investable?

sinleong said...

i've been adviced to wait till next year when prices are expected to drop at least 10%. however, i think this would apply to the mass products but choice properties, especially low density niche ones in good locations will continue to hold. may not rise but would hold.

u r right... from the yield, bangkok seems uninvestable however if huge foreign funds keep flowing into a country ridden with so much political turmoil seems to suggest there is confidence in the future of this country