Downtown Bangkok: More supply but buyers remain cautious

The downtown Bangkok condo market performed well during the final three months of last year, with the midtown and suburban areas of the city slowly regaining momentum.

Real estate firm CBRE, in its Q4 Bangkok Residential research report, noted that 51 percent more units were launched in downtown Bangkok compared with the previous year.

Some 12,544 units were debuted to the downtown Bangkok property market during 2017, according to the real estate firm.

“Increasing land prices and the scarcity of freehold land in prime downtown Bangkok locations have forced developers to find and explore new unexploited locations and land plots,” the firm said.

“Although market sentiment has improved, we believe that buyers in the downtown market remained selective and cautious, resulting in a mixed sales performance.”

CBRE said that only projects in good or new locations, with the right pricing and that matched demand in the area, did better than the average.

As of Q4 2017 there were 32,513 under-construction units in the downtown Bangkok area, and 73.1 percent of this future supply has already been sold.

Based on reports from publicly-listed developers and CBRE surveys, the firm said it believes that there were only about 2,329 built-but-unsold units from projects that have completed since 2014 in the downtown Bangkok area.

CBRE said it was not worried about having an oversupply in this area.

Increasing land costs remained the key factor which has pushed average prices to new highs.

Record prices are being achieved, but CBRE said it thinks the price growth rate has slowed. particularly for projects which are not located in prime downtown Bangkok locations.

“Our outlook is that sales will be relatively stable for most projects in the downtown Bangkok area, with buyers being more selective, especially for the most highly-priced products.”

“We do not believe that prices in the downtown Bangkok area will drop, except possibly in a very limited number of completed projects with a high level of unsold inventory,” CBRE reported.

It said that the increase in land prices, especially in the Central Lumpini and the Sukhumvit areas, means new projects will have to charge higher prices than those of previously launched developments.

In conclusion, and with a word of warning, CBRE noted that from a total of 109,399 under-construction units, 66,649 (61.1 percent) of units in the midtown/suburban areas of Bangkok have been sold.

“The remaining unsold under-construction inventory, together with built inventory, is still a problem,” it said.