Oversupply haunts Bangkok market

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As Thailand property developers rush to launch new developments in Bangkok before the end of the year, the market is at risk of a potential supply/demand imbalance.

In a recent report Dr. Sopon Pornchokchai, President of Thailand’s Agency for Real Estate Affairs (AREA), said the absorption is quite lower compared with new supply. He added that short-term speculation might not be currently feasible because prices are not increased substantially.

AREA is the largest real estate information and valuation centre in the ASEAN region.

In its latest survey conducted in mid-2017, it found that during the first half of 2017, of the total of 198 new projects, there were 54,389 units with a total value of THB 184.49 billion. The average size per project was 281 units which was significantly larger compared with the 2016 average of 241 units.

It is estimated that in 2017, the total number of housing units launched will be 110,557 with a total value of THB 365.29 billion. The number of units would be some 1.8 percent down from the number in 2016, 4.4 percent down in value compared with 2016.

AREA noted that of the total 54,281 housing units launched during the first half of 2017, 30,647 units or 57 percent, were condominium units. Townhouses constituted 32 percent (17,556 units), detached houses were 6 percent (3,499 units) and semi-detached houses were 4 percent (1,890 units). Only 35 percent (19,078 units) were booked by prospective buyers, but in the case of condominiums the proportion was higher at 48 percent

Around one-third (32 percent) of products were priced at THBB 2 million or below. Most of the products (65 percent) were priced at THB 3 million or below. The largest proportion of condominiums was offered at between THB 1-2 million (18 percent or 9,948 units).

Overall Sales Situation

As of mid-2017 there were 193,820 units available for sale. This was an increase for 5.1 percent compared with the end 2016 when there were 184,329 units for sale. The average sales price was THB 3.36 million – some 2.6 percent higher than last year (THB 3.27 million). Of the 54,281 housing units launched during the first half of 2017, only 44,790 units were booked by buyers. This, according to AREA, implies that supply was being absorbed less than demand to some extent.

Big Developers

The 50 Stock Exchange of Thailand listed real estate companies constituted some 78 percent of the total new supplies in the markets during the first half of 2017. Twenty years ago, listed companies constituted just one-third of the markets. AREA said the substantial growth can be attributed to lower costs of finance. In the market, the loan interest rate is some 7 percent whereas funds from the Stock

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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