There was a substantial decline in the number of sales, resales and new launches in all parts on Bangkok during Q3, with the number of new launches alone down 27 percent quarter-on-quarter in the downtown area of the city, and down by almost half in midtown and suburban Bangkok during the same period.
According to CBRE in its Residential Research report for the Q3 period, from more than 60,000 condominium units in the midtown and suburban areas of the city that are expected to be completed by the end of this month, only 31,000 units were completed between the start of the year and the end of September.
CBRE said that this large supply coupled with weak demand due to tightening mortgage criteria and a lack of buyer confidence saw condominium developers shifting their attentions from rushing to launch new projects, as was evident in Q2, to focusing on transferring completed units and selling completed but unsold inventory in Q3 through the use of a plethora of promotional campaigns including price discounts.
Default rates of buyers who had previously signed sales and purchase agreements, but were unable to gain title, according to CBRE and reported by listed developers, remained high in part due to speculators who were unable to resell their units prior to transfer and opted to walk away and forfeit their down payments.
The real estate firm said it believed recent government market stimulus measures combined with promotions from developers will be able to slightly lessen stress in the condominium market, especially in the midtown and suburban areas where the largest risk of delayed transfers and defaults exists.
Looking forward, CBRE thinks developers will continue to focus their attentions on transferring and clearing built but unsold inventory for the rest of this year, as opposed to embarking on new projects, but some launches that were postponed in Q3 will debut in the final quarter of the year. Many developers gave already launched promotional campaigns to attract potential buyers.
Developers also appear to be responding to the weak market by adjusting their strategies and reducing the number of new launches, CBRE noted. It added that financial institutions only seem to be willing to provide project loans to larger developers, thus squeezing smaller developers out of the market.
To read the full CBRE Bangkok Residential report for Q3 2015 click here.
