With the Bank of Thailand’s impending introduction of tighter mortgage lending for Thai nationals, some Thai buyers will be forced to rely on greater numbers of foreign buyers.
According to real estate firm CBRE Thailand in its Q3 Bangkok Residential market research report, some developers are trying to find locations where there is real demand from Thai end-users, indicating the previous and current demand may have been driven by other motives.
It also said that other developers have increased their reliance on foreign sales where there is uncertainty as to when the final occupier will be.
The measures from the Bank of Thailand, which will come into force I on April 1, 2019, will favour first-time buyers over investors or those with existing outstanding mortgages.
CBRE said that domestic demand is expected to shrink as a result of the new restrictions, and it anticipates what is says will be a “domino effect” where Thailand property developers will further shift their focus towards foreigners, who primarily by with money from overseas.
It added that many developers have already increased their foreign sales, especially to individual Chinese buyers and through bulk sales to Chinese property agencies.
Without naming the projects, it said same developments had reached the 49 percent foreign quota sales – a very rare situation during previous years.
“This further raises our concerns on whether high reliance on foreign sales in positive”, it added.
It justified the concerns by saying it remains uncertain as to whether these foreign buyers will proceed to transfer ownership if they were buying for speculation, and if there is no clarity on who will leave in the completed units.
“Most of the foreign buyers are investors and we dount that they will live in the units which they have bought,” it said.
The real estate firm concluded that buyers, and especially those buying in the THB 300,000 per sqm price bracket and above, will be more selective during a time when sales will be relatively slow.