The outlook for the Thai economy in 2018 appears positive, based on trends that we saw emerging in the second half of last year. Most property developers have announced investment plans that feature higher revenue targets compared with last year.
Available information so far shows that listed developers plan to launch about 400 billion baht worth of housing projects this year. The figure is higher if non-listed, small and medium-sized developers are included. But listed developers dominate the industry in terms of ability to acquire land and access to financing beyond bank loans. The latter point is important because banks have been tightening their scrutiny of loans to property developers, so the gap between listed companies and their smaller peers is getting wider.
Still, some small and medium-sized developers have been stepping up property launches as their ultimate aim is to build up a project portfolio and revenue stream that would make them attractive candidates for stock market listings in the future.
The property market in the first two months of this year has already shown a lot of movement, similar to last year, in both the condominium and detached house segments. About 6,000 new condominium units were launched in January and February, similar to the total in the same period last year, with another 3,000 units expected this month.
The market for single detached housing tends to grow at a slower rate than that of condominiums, and figures are difficult to collect since developers typically sell units in phases and not entire projects all at once.
The available information shows just 852 new housing units launched in January and February, dramatically lower than the 2,000 units launched in the same period last year. As well, more developers are shifting their focus outside of Bangkok, where lower land prices, convenient transport and a house with land are still the priorities for buyers.
In the condominium market, areas along existing, under-construction and planned mass-transit lines are still the focus of most developers. Their main aim to market units costing 3 million baht or less that would appeal to working people who use mass transit to commute to their jobs. Few developers can afford land in the inner city any more, with the exception of a handful of big names that continue to offer high-end and luxury condos.
While prices of condominiums have tended to rise more than those of detached houses in recent years, prices of the latter are going up, as well-located plots are becoming scarcer. Many developers must now look to the periphery of the capital or beyond for good sites where they can achieve acceptable financial returns.
While residential unit launches so far are little changed from a year earlier, if the current economic momentum continues, we might see more developers announce new projects in the second and third quarters, by bringing forward some projects they were planning for next year, especially condominiums.
Property demand has also been improving since last year, but much will depend on consumer confidence in the long-term economic outlook. Developers these days are paying a lot more attention to market research, and that includes gauging when people are in a buying mood. Many use their own marketing channels, drawing from a database of existing customers, to achieve high take-up rates in a short time after the launch of a new project.
Foreign buyers, meanwhile, are becoming a bigger factor in the local property market, especially for condominium projects in Bangkok and some tourist destinations. Chinese buyers represent a major new group of potential customers, and more developers are looking for ways to cater to this potentially large market over the next few years.
Courtesy: Bangkok Post