In a column in March 2006 I noticed that real estate speculators are increasing the prices of the new condominium units, which could already be considered high compared to the older ones in Bangkok.
Today let’s take a look at an example of this phenomenon. There was a new condominium recently launched on a plot of land adjacent to another older building. The latter is just over 10 years old, but when it was first built it was considered one of the few grade A condominiums in Bangkok. It has a delightful podium level, with a quiet pool area, a tennis court, every other structure you would expect and each unit measures at least 300 square meters. Why am I telling you? It is because the selling prices in this condominium are just over half the selling prices in its new neighbor.
For convenience, let’s say that the old condominium sells for 55,000 baht per square meter and the new one sells for 100,000 baht per square meter. Is the difference in price really justified?
We can easily exclude the price of the land, since the two condominiums are located next to each other. So what’s the difference?
Construction methods? Doubtful. In fact, many older condominium units are probably more solid than their newer counterparts. Many developers who produce new lower-level condominiums use materials, such as plastic leatherette floors, which are unlikely to last more than a year or two. In addition, lower quality materials may allow sounds from nearby units to pass through.
Facilities? Not in the case above. The older condominium already has a full range of services.
Caliber of co-owners? In this case the new condominium has a number of smaller units, perhaps oriented towards a more bourgeois market than the old building which includes only large units.
The appearance of the building? This must be. The new condominium will have a beautiful new and shiny lobby, a clean and recently painted exterior, freshly laid floors in the common areas and new furniture. The old condominium is waiting for a repainting, and a new lobby would also be nice.
So why don’t the owners of the old condominium make these improvements? Probably because when it comes to buying a condominium, people are ready with their checkbooks, but for ongoing maintenance, that’s not the case. Or perhaps the members of the condominium committee are not so good at selling, in this case the idea of a cosmetic update necessary to add value – like those who work for the developer.
Does this mean that in five or 10 years the new condominium will look like the old condominium? Buying a condominium is like buying a car; does the price depreciate over time?
Well, if you repainted the old condominium mentioned above, you gave it a new lobby with new furniture and the podium level resurfaced, and renewed the small amount of common space in front of the units, so the difference between the two wouldn’t be fantastic . I don’t see many potential buyers punching the concrete structure to check the integrity of the concrete.
Remember that if you buy a unit in an older apartment building, there is a good chance that there may be many old custom-made wooden furniture inside that has been out of fashion for 10 years. You may want to rip the whole lot and start over. If you had carried out a complete renovation of the unit’s new floors, new furniture, new electrical and sanitary installations, you would probably be looking at spending in the region of 10,000 baht per square meter.
So maybe it all depends on how much you’re willing to spend in a sparkling lobby. I usually spend about a minute a day walking around the lobby myself. I spend most of my time inside the unit. And you?