Predictions are the flavour of the week, and mine is that Thailand’s property and real estate markets will experience a turning point in 2018. That’s my strong belief.
We’re already seeing a slowdown in price rises, especially at the high-end of Bangkok’s property market, and that will likely extend to all sectors, except perhaps for the sub-THB 50,000 per sqm sector which is continuing to attract interest from the local population.
Actual rents are barely rising too, according to recent research data, although asking prices – the metric that many will consider as being an accurate measure of the market, are stagnant at best.
The fact is that with little transparent and timely data for Bangkok’s property sector, and indeed for the whole of Thailand, predictions can only be based on outdated data or previous experiences of experienced Thailand property market watchers and writers.
Here are five of my own predictions for what may happen in 2018 within Bangkok’s property market.
Increasing supply/demand imbalance
I will stop short of saying there’s a confirmed bubble, but I don’t think we’re far off one. Throughout Bangkok and its suburbs there are simply too many completed but unsold condo units weighing heavily on developers’ balance sheets. There are not moving quickly, yet more are planned to debut in the next 12 months. Kasikornresearch, for example, has predicated an additional 108,000 new residential units will enter the Bangkok property market in 2018. Without existing stock being sold, the number of units will soon outnumber the number of potential buyers, if it’s not doing that already.
Chance of happening in 2018: 80%
Fewer high-end launches
In Bangkok’s high-end sector there may be less new developments. Kasikornresearch noted that demand for upscale condos has been partially absorbed, and urged developers with plans for high-end condo projects in 2018 to be cautious about their investment plans. Looking at the evidence, you must agree. How many people can truly afford to buy at the THB 350,000 per sqm level, and more? There has been some speculative activity in this sector; you only have to look at the multitude of down payments being touted for sale from there “investors” who have no intention of proceeding with their purchase.
Chance of happening in 2018: 75%
Few new launches in general
This is probably my boldest prediction, and one that goes against almost every other property market prediction I have seen. With limited land and rising prices, Thailand’s property developers could well see 2018 as a time to pause and assess future plans. Of course, some have land banks that need to be developed, but those rising land prices and increasing construction costs may well be viewed as simply uneconomical to develop a new condominium at this time.
Chance of happening in 2018: 100%
More overseas projects
In many cases they will offer better returns, and throughout 2017 the number of overseas property investments, especially from the United Kingdom, has witnessed a significant increase. A single weekend during November saw four separate roadshows, each offering U.K. property investments for little more than a studio condo in Bangkok – but with significantly higher returns. It should go without saying that those returns are claimed, and full legal due diligence needs to be undertaken. But my understanding is that with U.K. buyers looking to tighten their spending habits ahead of an uncertain pre-Brexit period, U.K. developers will again see Southeast Asia, and especially secondary and tertiary cities like Bangkok, as a profitable hunting ground for potential new investors.
Chance of happening in 2018: 100%
To avoid the speculation that’s happening now, although no one wants to admit how much, I would not be surprised to see legal enforcement of minimum deposits for potential property buyers. Some property developers already implement 20 percent deposits or more to prevent speculation and to ensure buyers are serious. Although it would be an unpopular decision, something like this might be viewed as a good option for the long-term prosperity of the Thailand property market.
Chance of happening in 2018: 40%
What are your predictions for the Bangkok property market in 2018? Feel free to leave a comment and let’s see what happens.