If property cooling measures are enacted in Bangkok next year as planned, the city could be swamped with a large number of completed-but-unsold condo units.
The last quarter – between July and September – saw more than 22,500 new units enter the market, the highest number for a few years.
These new units, even with a reported take-up of some 80 percent, come on top of what is estimated to be more than 36,000 units already waiting for buyers.
The danger, as we see it, is that some off-plan buyers and speculators, who perhaps paid a minimal deposit several years ago, will not be able to obtain finance and will choose to ditch their sales and purchase agreements.
So, Bangkok could easily see approaching 50,000 unsold units before the end of 2018 when you take into account the number of new launches expected during the most prolific time of the year – the traditional end-of-year push.
Some agencies are suggesting this is oversupply, and we’re sure the Bank of Thailand would not feel the need to be considering property cooling measures if they didn’t think it was necessary.
But don’t think Bangkok will suddenly become bargain basement territory. There are too many people, and property developers, with substantial investments in bricks and mortar that will not allow any significant price corrections.
We’ve already seen this in pre-Brexit London. Some developers are simply opting not to sell their prime units rather than letting them go for ‘silly’ prices.
Thailand property developers are not stupid but they have shareholders who expect returns. It will be difficult for them to cease developing, regardless of the property market climate.
What will happen in the next 12 months is anyone’s guess. Ours, as we’re starting to see, is developers focusing on the THB 75,000 to THB 100,000 per sqm price range at the expense of the high-end market.
That’s where a certain amount of affordability remains among Thais, but location will become more important than ever.
Unlike at least one agency we don’t necessarily believe that foreign buyers will hold the answer to this issue. While they have become an important group for Thailand’s property developers and will not be directly impacted by any directives from the Bank of Thailand, foreigners tend to focus their attentions around Sukhumvit, and not in the locations where most of the unsold units will be.
We would love to know your thoughts for the next 12 months. Please feel free to leave them as comment along with this story.