Thailand property developers focusing on the high-end of the market have been urged to exercise caution about their plans for 2018.
Respected research house KResearch, part of Kasikornbank, in its latest report on Thailand’s property and real estate sector has identified increasing competition with as many as 108,000 new residential units coming to market during 2018.
The report said: “As Thai economic recovery momentum is expected to continue in 2018, boosting property developers’ confidence toward the offering of new residential units for sale, the competition in the property market remains high.”
“Also, a growing supply of unsold residential units will pressure property developers, forcing caution in sales targets.”
KResearch said that it expects that between 100,000 and 108,000 new residential units come up for sale in the Bangkok metropolitan area during 2018, a rise of up to 2 percent from 2017.
Developers’ strategy for 2018 will likely focus on investments along mass transit routes, it said.
“The strategy of each Thailand property developer toward their adjustment varies; each market segment requires a different approach.”
“Developers with land in prime locations, e.g., the city centre or in other business districts, will enjoy the option of building their high-end condominium in the format of mixed-use projects to earn more from business space rentals.”
It added that although the targeted consumer of high-end condominiums will have high purchasing power, the size of this sector is “rather small”.
“Demand for upscale condos has partially been absorbed. As a result, operators planning to develop high-end condo projects in 2018 should be cautious about their investment plans,” it added.
Regarding mid-range residential projects during 2018, KResearch noted that a possible winning strategy requires good locations.
“If not situated adjacent to mass transit routes, projects need to be accessible via various types of transport, otherwise they should be conveniently reachable by public transportation.”
It added that: “Thailand property residential units should have functional designs to give the best value for money. Sales strategies for condos could focus on recent graduates who have begun work. “Such potential buyers tend to have few debts and want to own their first home.”
KResearch said that in low-rise projects, Thailand property developers may want to focus on customers expecting an increase in the size of their family, as well as on the working population with higher incomes who are thinking of moving out of small condo to live in a townhouse or a single detached home.
KResearch concluded that the low-end Thailand property residential market is expected to slow during 2018, prompting developers to ease up on such developments.
“At the same time, they will have to bolster their marketing campaigns to sell their unsold supplies.”