Bangkok’s resale and ready-to-move-in units are expected to become more attractive due to their prices being lower than newly-launched units, according to new research.
Colliers International Thailand, in its Q2 Bangkok Condominium Market Report, noted that demand in the Bangkok condominium market still remained slow, with some developers revising their plans and shifting their focusing more towards housing projects as well as postponing launches.
The real estate firm expects the number of newly launched condominium units in Bangkok during 2015 may be less than 50,000. It said that new condominium transfers during the past three or four quarters has shown a declining trend, due to the economic slowdown and banks’ stricter consideration of mortgage loan applications.
The average take-up rate of all condominium units launched in 2Q 2015 was approximately 76 percent according to Colliers, higher than that in the past few quarters. Listed and well-known developers held the largest share of the Bangkok condominium market.
It said that decreased confidence is still the major factor impacting the take-up rate in the mid- to low-level market. The total number of condominium units that are expected to be launched in 2015 may not be over 50,000, it noted.
Worryingly, it also noted that many buyers cannot transfer their condominium units, because banks are not approving their mortgage loans. Developers are now more focused on the non-transfer units in their backlog, because it directly impacts their financial performance.
Many speculators also do not want to transfer their units, because they need to wait until the last minute before transferring or selling them back to the developer.
Many condominium units were launched in the past few years and many are waiting to be absorbed in the market. The huge number of unsold units and units from speculators in the mid- to low-level market is the major factor forcing a freeze in the prices of mid- to low-level units.
The increase in land prices in the past few years is the major factor in condominium prices, Colliers said.
Banks are tightening credit for developers and buyers, and the rejection rate has increased to 30 percent, especially in the mid- to low-level group, which directly affected the transfer rate.
On the plus side, it said that more new condominium units were launched in 2Q 2015 than in the first quarter by around 9.5 percent. Approximately 11,450 condominium units were launched in Bangkok in 2Q 2015, while nearly 8,750 units were launched in the area that connected to Bangkok along the new BTS extension lines, especially the area along the BTS Purple line.
Despite this, Colliers said the Thailand property market still continued to drop in 2Q 2015, and most developers are concerned with the purchasing power of Thais. However, many developers still launched their new projects in 2Q 2015, but they are more focused on the areas close to existing and under construction mass transit lines. In addition, most developers will establish property shows or exhibitions to sell their unsold units and offer their new projects at special prices.
The New Residence Buyer’s Confidence Index, compiled from a survey by the University of the Thai Chamber of Commerce, continued to decrease from January to only 63.9 in June 2015, the lowest in the past year. This was due to Thailand’s economic situation still not recovering, and many negative factors that affected Thai confidence, so most Thais were spending less and do not want to buy any property that are become a long-term debt.
Colliers also noted how many listed developers held property exhibitions for their new projects in other countries in Asia, especially China, Hong Kong and Singapore, because they need to increase the proportion of foreign buyers to replace Thai buyers.
It said that most condominium units launched in 2Q 2015 were selling at between THB 50,000 per sqm and THB 100,000 per sqm, while only 5 percent, or approximately 550 units, were selling at more than THB 200,000 per sqm. Many luxury condominium projects selling at more than THB 200,000 per sqm had a high take-up rate in 1Q 2015, but developers are still not confident about the demand in this sector, so only three projects were launched in 2Q 2015, Colliers concluded.
Source: Colliers International Bangkok Condominium Q2 2015 Market Report.
