How Much Does Luxury Cost?

A rather intriguing title to this article don't you think? One that of course there is no answer to. You might as well ask yourself how long is a piece of string? Or perhaps this question should be answered with another question; “How much do you have”?

“Excuse me sir, how much is this thingy?”

“Yes madam, how much do you have?”

“I have $100,000,000”

“Well you’re in luck, that’s exactly how much it costs”

I asked myself recently ‘How much does luxury cost?’, or rather how much are people prepared to pay for luxury, when looking at the price of luxury property in Bangkok. You see, I’m an estate agent (booooo!). I’ve worked in this field in Bangkok for over 10 years, most of my adult life, and have seen some staggering variations in prices of condominium units depending on their luxury status, and the trend seems to me to be getting ever more noticeable.

To give an example; a new condominium, with great impressive lobby, but without all of the extra trimmings, and with smaller units geared to the medium wealth customer, may cost around 150,000 Baht/sq.m. (US$5,000/sq.m.).

The new luxury condominium, with great impressive lobby, and extra trimmings, can fetch as much as 700,000 Baht/sq.m. (US$12,000/sq.m.)

Something doesn’t add up to me. Maybe it’s because I’m not filthy rich, but are developers cashing in on the super wealthy, and if so, should it bother me?

What exactly do you get?

So for this price variation, for convenience let’s say 4 times the price, what exactly do you get? We’ll, you do get a little nearer to the ‘perceived’ expensive areas. In Bangkok, this can be a little as 500m here or there. So you are 500m in a better location.

You get a slightly more impressive show room, and brochures made from inch thick paper, all to keep up appearances. But are the buildings better?

Fundamentally, yes they are a little bit better. The lobby will be a little bit bigger, a little bit grander. Normally all developers will put money and effort into the building lobby, but the lift lobby and corridors on each floor of the building will often be far less grand and much plainer. The luxury property will have high detail throughout the building, on every floor, and even the fire escapes, something that most residents will never see, but they need to look great nonetheless!

Many of the new luxury residential buildings in Bangkok are set up as mixed use projects, specifically hotel and condominium. Teaming up with a reputable hotel brand, one that has built up a good reputation of luxury, is a great way for developers to command ever higher prices. Brand names like the Ritz Carlton, Four Seasons, Sukothai and the Waldorf have all occupied mixed use projects, namely Mahanakhon Tower, Four Seasons Private Residences, The Sukothai Residences, and Magnolia Residences, all of these four condominium projects touting themselves as the most luxurious and most exclusive etc. So you get some great hotel services thrown in as well.

So yes, the buildings are a bit better, the location is a bit better, and the services are a bit better. Not 4 times better mind, but you have to remember that the people who buy these buildings are successful and very wealthy, and as a result are likely to be a little more arrogant as a result, and that arrogance could cloud their judgement some. Nothing against the wealthy, they've done better than most people, and it’s human nature, I would be the same. Also, something I see very often in Thailand, if someone has money, then other people around them will automatically start rolling over sideways trying to lick their rear ends hoping that some of their wealth will rub off. It just wouldn’t do for these super wealthy individuals to walk into their condominium building, and have people treating them like other normal people.

Why aren’t more developers getting into to the mix? For start, I image the extra 500m better location is expensive. Land owners are not fools and for many developers, the price tag associated with the ‘perceived great location’ 500m down the road may already be a no-starter. Constructing a building large enough to be used a mixed use hotel and condominium will cost much more than just a stand-alone condominium, and the huge investments required will filter out most developers.

But not all luxury condominiums have a brand name hotel behind them. Take ’98 Wireless’ for example. This is the most current flagship project by Sansiri Plc, a Thai developer with a trusted reputation, which has already built hundreds of projects and has more project currently under development than I have time to mention here. ‘98 Wireless’ is one of the most expensive condominium buildings in Bangkok, if not the most expensive, but it is just a stand-alone condominium, with no hotel, just by itself. Why can this building sell at 700,000 Baht/sq.m.? For this example, I think it all comes down to location, situated on Wireless Road, near to the BTS Ploenchit station and the intersection between Wireless Road and Ploenchit Road, it is near to the British and American Embassies, and land prices are not cheap here, not cheap at all.

Funny though, if you go just 500m east from this, Bangkok’s ‘most exclusive condominium’, you would be in Nana Plaza Entertainment Center watching scantily clad women dancing in Go-Go bars in one of the seediest parts of town. Something I’m sure isn’t mentioned in the brochure!

If I were super rich, would I pay these prices? Of course I would. With such a limited number of luxury apartment building in Bangkok, what choice do you have?