Bangkok’s condo market is experiencing “… increasingly challenging market conditions …” that has seen many condo developers diversify into other sectors of the market such as office and hospitality.
Despite this, and according to real estate firm JLL, the residential sector is seeing healthy sales rates due to domestic demand for higher-end products coupled with interest from overseas buyers, especially from China and Hong Kong.
Andrew Gulbrandson, Head of Research and Consulting at JLL, said: “While domestic demand for higher-end product coupled with marketing efforts targeting overseas buyers, particularly from mainland China and Hong Kong, has kept sales rates relatively healthy, it is becoming increasingly difficult for developers to see immediate success when launching new projects.”
He added that one potential bright spot on the horizon for investors and owners in Bangkok’s condo market is the proposed new land and building tax regime.
“Should these new regulations come into force in the near term, JLL believes this will have a positive impact with respect to affordability as it should encourage landowners to sell rather than face taxation on vacant land, which in turn should ease rising land prices and at the same time create new opportunities for lower priced products,” he noted.
JLL reported that the Bangkok property market finished the first half of 2018 solidly with sectors enjoying favorable trading performance.
It noted that condominium supply outweighed demand, but added that prices stayed generally stable.
It said that Bangkok’s condo market has seen high levels of domestic household debt during recent years, creating increasingly challenging conditions for property developers that traditionally target mass-market buyers.
As a result, many developers have adopted new strategies including moving upmarket, focusing more on landed housing, ramping up overseas marketing and allocating investment to recurring income properties.
JLL said that as of July 2018, there were more than 540,000 in Bangkok’s condo market.
Of these, 451,000 units are in the mass-market segment and 89,000 units are in the prime segment.
It added that with many developers moving upmarket, the influx of new supply at the higher end of the price spectrum has put downward pressure on selling prices.