A drop in demand leaves Bangkok with a glut of completed new condos
A parliament of owls? A murder of crows? A flock of geese? But what’s the collective noun for a lot of available new condo developments in Bangkok? A glut of Condos?
As Thailand’s economy is hit by the double whammy of fallout from US-China trade wars and lingering political instability, stricter mortgage-lending rules are also kicking in creating a buyer’s market in the capital.
Some basic statistics… 65,000 new apartments became available last year. That’s 11% more than 2017 and the most since 2009. But a Knight Frank reports indicates that demand is down and asking prices have decreased 6% year-on-year. Rental prices have also softened as recent investors remain keen to find tenants.
Aliwassa Pathnadabutr, a managing director of CBRE Group in Thailand, says that it’s a great time to get into the BKK market with prices down a bit and the selection better than ever.
“The overall condominium market will be slower this year but there are still opportunities in some locations with the right product at the right price. We believe the market is entering an equilibrium stage where prices will be adjusted to a more realistic level.”
Revised mortgage-lending rules that came into effect from April 1 are also dampening enthusiasm for property because lenders will now restrict the amount of money some buyers can borrow.
Meanwhile Brennan Campbell from FazWaz.com says the biggest developers are wanting to cash in their stock so they move on to the next projects.
“Some of the country’s largest developers are holding a huge inventory of completed or soon-to-be completed stock where they have seen demand soften through the first two quarters of 2019. The motivation to sell these units is growing as this capital is required to fund future projects. The result? A supply of incredible units in some of the best areas of Bangkok where buyers can be more creative in their negotiation strategies in order to secure the best overall value.”
Part of the softening in sales may also be linked to a drop in Chinese visitors to the capital. Whilst not a huge drop it is measurable considering that Chinese investors have historically been the principal foreign property buyers in Thailand. The lack of Chinese visitors is mostly a domestic problem with China’s economy softening as the US-China trade war bites.
CBRE reported recently that Thailand’s real estate market had a high reliance on foreigners.
“Most of the recent foreign buyers are investors and CBRE doubts they will live in the units they have bought. Foreign sales are highly sensitive to economic conditions of the buyer’s home country.”
Sopon Pornchokchai, president of the Agency for Real Estate Affairs, reports that a total of 454,814 residential units across the country were unsold in 2018.
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