More than 80 percent of new condominium launches across Bangkok during July, August and September were priced under THB 100,000 per sqm according to new research.
Real estate firm Colliers International, in its Research and Forecast Report for Q3 2015, said only 6,810 units were launched in the three-month Q3 period – some 40 percent lower than the number of newly launched units during the second quarter.
The significant decrease was attributed to the market slowdown, and according to Colliers most property developers’ lack of confidence in the market situation. Some have postponed launching new projects until the final quarter of this year, or have delayed until 2016.
In addition many property developers are still concerned about the transfer rate of completed units or those scheduled to be completed during the final months of 2015. This is because the number of transferred units between January and July 2015 was lower than in the same period during 2014 due to the economic slowdown and stricter commercial bank lending restrictions that have seen speculators refuse to transfer their units.
Around 41 percent of newly launched units during Q3 were in suburban Bangkok, or in areas outside the coverage of the existing mass-transit area. More than 2,600 units were in areas along the mass-transit lines that are under construction, such as Krungthep-Nonthaburi, Pracharat Sai 2 and Phahonyothin roads.
Demand
The New Residence Buyer’s Confidence Index, compiled from a survey by the University of the Thai Chamber of Commerce, continued to decline and in August 2015 recorded its lowest figure in the past year. This, Colliers said, was because Thailand’s economic situation has still not recovered. Most Thais were spending less and did not want to buy property that would create long-term debt.
The average take-up rate of new condominium units launched during Q3 was approximately 50 percent, a dramatic decrease from Q2. The average take-up rate of all condominium units in Bangkok was around 78 percent, and approximately 30,000 units are still waiting for absorption into the market according to Colliers.
Around 48 percent, or most available units, are for sale at prices ranging from THB 50,001 per sqm to THB 100,000 per sqm. This is because many projects launched during the past few years are being sold in this price range.
The condominium projects that are for sale at more than THB 200,000 per sqm had the lowest take-up rate compared with other price range groups – at around 70 percent. This was because most buyers in Bangkok cannot afford them, the real estate firm said.
It reported that most property developers with condominium projects with prices higher than THB 200,000 per sqm were conducting roadshows and exhibitions in other countries, especially Singapore, Hong Kong and China, because they need to increase the proportion of foreign buyers to replace Thai buyers.
Prices
The average price of new condominiums launched during Q3 was around THB 97,500 per sqm, a decrease of approximately 11 percent from the previous quarter due to less luxury project launches. However the average price of completed or under-construction condominiums in Bangkok has increased every quarter by around 5 percent, depending on location, project position and construction progress.
Most condominium units, or around 81 percent of total units launched during Q3, were selling at prices of between THB 50,000 per sqm and THB 100,000 per sqm, while only 5 percent – or approximately 350 units – were selling at more than THB 200,000 per sqm.
Colliers noted that although many luxury condominium projects on sale at more than THB 200,000 per sqm were launched during the past year and enjoyed high take-up rates, most developers are still not confident about the demand for luxury projects and thus, only one luxury project was launched in Q3.
Forecast
Colliers said the new mass-transit lines are a positive factor for the condominium market in Bangkok as many developers are looking for new locations for condominium projects. Some projects are currently under construction and some new projects are expected to open for bidding soon.
After nine months of slow demand, some developers are revising their plans and shifting their focus more towards housing projects, as well as postponing the launch of some new projects. Although many developers are still planning to launch new projects during Q4, the number of newly condominium launches in Bangkok for the entire year may be less than 50,000.
Resale and new ready-to-move-in units are becoming more interesting than newly launched units in the market, Colliers noted, due to lower pricing compared with new projects.
If the Thai government announces further policies to aid the property market in Q4 it will boost demand in the condominium and housing markets, as well as help property developers that have completed but unsold units or that are scheduled to be completed in the next few months.
