Uncertainty looms in the Bangkok residential market

Bangkok residential market
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Uncertainty is looming large in the Bangkok residential market, and for once those are not our words.

As we’ve written countless times before, when words like these come from a real estate agent you must take note.

In this case real estate firm CBRE has reported Thailand property developers have increased new launches, at the same time sales to Thai buyers have slowed in some locations.

It said that sales are likely to slow further due to the coming imposition of tighter mortgage lending initiated by the Bank of Thailand.

CBRE noted that some developers in the Bangkok residential market are trying to search for affordable locations with real demand, while others are increasing their reliance on foreign sales, many of whom are buy-to-let investors.

The real estate firm said that it thinks the local rental market in the midtown and suburban areas in Bangkok is quite flat, so buy-to-rent investors may not achieve the yields they were expecting.

Domestic demand in the Bangkok residential market is expected to shrink as a result of the new Bank of Thailand mortgage restrictions, and CBRE is expecting a domino effect where developers will further shift their reliance towards foreign buyers, who purchase primarily with their own funds.

ThailandProperty.News also notes that, in some countries, mortgages for Thailand property are available and will bypass the Bank of Thailand market cooling attempts.

CBRE said many developers have reported increased foreign condominium sales in the Bangkok residential market, particularly to Chinese buyers, both in the form of individual purchases and bulk purchases by Chinese property agencies.

Several projects have revealed that they have reached their limits of foreign ownership quota (49% of the saleable area) which has been a very rare occurrence in the past.

Aliwassa Pathnadabutr, Managing Director of CBRE Thailand, said: “This further raises our concerns on whether high reliance on foreign sales is positive.”

“It is still uncertain whether these foreign buyers will transfer title if they were speculators and there is no clarity on who will live in these units once construction finishes.”

“Most of the foreign buyers in the Bangkok residential market are investors, and we doubt that they will live in the units which they bought,” she added.

Based on CBRE Research, roughly 7,200 units were launched in the downtown area during Q3 2018, compared with only 1,300 units combined during the first two quarters of the year.

The total number of downtown units launched during the first three quarters of 2018 represents 8 percent growth from the same period last year.

Average asking price of high-end and above units in freehold condominium projects under construction in downtown Bangkok increased slightly by 1.7 percent year-on-year to THB 277,000 per sqm.

The real estate firm does not believe average prices in the downtown area will drop, except possibly in a very limited number of completed projects with a high level of unsold inventory.

The outlook is that sales will be relatively slow for most projects in the downtown Bangkok area, with buyers being more selective, especially for projects that are asking for more than THB 300,000 per sqm.

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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