Bangkok Condo market pace accelerates
New unit launches surge in third quarter but developers sticking to tried-and-true areas.
Surachet Kongcheep – a local property market expert.
The third quarter of 2018 was the busiest in more than three years for the Bangkok condominium market, with 23,559 units launched, 180% more than in the previous quarter.
Some 63% of all new units in the third quarter were near existing BTS and MRT lines. This reflects the preference of both developers and buyers for areas where transport and other amenities are fully developed. Many more mass-transit lines are planned or under way in the capital but delays are common and developers want to see concrete signs of construction before exploring areas along new routes.
The main concern of all developers is the overall real estate market is still not 100% recovered, and the purchasing power of many Thai buyers is limited as household debt levels remain high. Consequently, developers are focusing on high-potential locations where they are confident they can quickly sell units at prices the market is willing to pay.
The average selling price of all new units launched in the third quarter along the existing skytrain and subway lines was 141,350 per square metre, little changed from the second quarter but down 3.8% from a year earlier.
All told, however, 77% of all new units launched in the quarter were priced below 150,000 baht per sq m.
The average take-up rate of all new condominium projects launched in the third quarter 2018 was around 60%, slightly better than in the past few quarters, reflecting an improving economic outlook.
New unit launches in the first nine months of this year totalled 45,899, and plans for the fourth quarter indicate that the total for the year will equal or exceed the 56,000 units launched in 2017.
Developers are continuing to acquire plots along new transit lines and will look to launch projects once they see concrete construction progress. Areas of interest include the northern extension of the Green Line, followed by the Orange Line.
The area along the Blue Line has seen the highest number of new units, however, with the total over the past four years reaching 29,536 units, reflecting the presence of some large buildings with 1,500 or more units each. The northern Green Line is next with 20,335 units, especially around the Ratchayothin intersection. The areas around the Bearing and Samrong stations have also been busy with 18,825 units launched.
Many developers are still concerned about unsold units, which currently total around 43,000. As they look to pare down inventories, some developers are focusing more on foreign buyers, especially Chinese buyers who have become a big factor in the past two years.
The real number of available units may be even higher, however, if units purchased by investors and speculators are taken into account. The Bank of Thailand has proposed tougher mortgage lending regulations to curb “search for yield” behaviour by condo buyers. It remains to be seen how this will affect the market if the measures take effect in January as planned.
Source: Surachet Kongcheep, Bangkok Post