Bangkok condos: An “increasingly fragile market”

Bangkok condos
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Sales of the highest-grade Bangkok condos are predicted to slow, according to one real estate firm

Last week saw the release of new Q3 research, albeit focusing on different parts of the Bangkok condominium sector.

This provided market watches, buyers and investors with what is often conflicting and potentially surprising information.

Real estate firm Edmund Tie and Company reported that average take-up rates of newly launched condominium projects solely in the Bangkok central business district (CBD) reached 31 percent during Q3 2018.

This, it noted, was even lower than the poor performance of 46 percent seen during Q2 2018.

Total new condominium supply in the Bangkok CBD during Q3 2018 was 1,636 units, rising from 852 units in Q2 2018, according to the firm.

The total number of new units launched increased by 92 percent compared with the previous quarter while average unit selling prices stayed flat at THB 330,447 per sqm.

It said: “New supply during 2018 has been notably lower than recent years due to developers adopting a more cautious approach to the market.”

“Sukhumvit was the dominant location for launches of new Bangkok condos condos this quarter, as it had been for much of 2018.”

The firm added that the average asking prices of resale condominium units stayed at THB 133,000 per sqm.

“The significant drop in overall supply in the Bangkok CBD shows that developers are responding to the weaker demand for residential units.”

“In non-CBD areas, supply remains high and often outstrips demand. Banks are also more cautious in granting new loans, which places more pressure on the increasingly fragile market.”

Although local and international investors continue to invest in Bangkok condos in the CBD, they are more cautious when selecting a property. Higher land prices and prudent buyers are proving to be challenging for developers.”

“At present, there are no signs of the market taking a serious dip but sales rates, supply and growth in average prices are all slowing as the market makes a more comprehensive and manageable adjustment.”

Elsewhere, Colliers International Thailand reported that new condo supply during the three months ending September 2018 was the highest seen for more than 10 years.

It reported there was 22,579 new units launched during the third quarter in the Greater Bangkok area from a total of 46 new developments.

This, it said, was an increase of 20 percent compared with the same period in 2017, and a huge 165 percent increase from the number of new launches seen during Q2 2018.

It also noted that average sales rates of new launches of Bangkok condos during Q3 2018 was 64 percent, and that in many developments the 49 percent ‘foreign quota’ had already sold.

Colliers said that 3,086 units – 13.7 percent – of the total Q3 new supply, was launched in what it described as ‘inner Bangkok’.

Prices of ne launches continued to increase. Colliers said the average price of new units launched during Q3 was THB 137,933 per sqm, up 26.4 percent from Q2.

It attributed the rise to new developments being located along current mass-transit lines.

Even at the lower, sub THB 100,000 per sqm range, prices rose by 11 percent quarter-on-quarter.

“While Thai demand is limited and being replaced by foreigners, developers should be more cautious as foreigners are investment buyers,” a spokesman for Colliers said.

Andrew Batt
The author of this article is Andrew Batt, the founder and editor of www.thailandproperty.news. Andrew has been writing about property and real estate issues in Thailand and Southeast Asia for more than 10 years. He has worked for PropertyGuru Group, DDproperty, Dot Property Group, Hipflat and AsiaRents. He has also produced content for leading Thailand property developers and real estate agencies.
Email: andrew.thailandpropertynews@gmail.com.

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