Here is the conundrum for Bangkok’s property developers.
On the wide we have about half of the whole year’s total midtown and suburban supply set for completion before the end of the year. On the other side we have the buyers of these units who, according to research from numerous real estate firms, and defaulting on their sales and purchase agreements because, quite simply, they are unable to get credit from the banks to make final payments.
There is demand for new units – that has also been shown in many research reports that have been published in recent weeks – but the question facing many developers is whether to focus on continuing to build new units or to focus their attentions on shifting the new yet unsold properties.
After all, these developers will not realise a single satang until the transfer is made to an eventual buyer or investor.
What’s happening now is that a significant number of developers, especially with unsold units in less-then-desirable locations, are substantially discounting their projects in order to shift what they have and move on.
Discounts of 20 percent or more are common, but will this be enough to tempt buyers to part with their cash in what is still arguably an economic slowdown.
Only time will tell the impact these unsold units will have on the market, and indeed how much they will have to be discounted in order for them to sell. It may be the middle of 2016 before the full extent of what’s happening in the Bangkok property market right now is truly known.
The good thing, as shown in the graphic below from CBRE Thailand, is that developers have moderated the number of new launches that are planned in the near future – allowing for the current unsold units to be absorbed into the market.
