Unsold properties saturate Thailand real estate market, may breach 1 trillion baht
Developers of residential properties in Thailand should exercise caution when announcing new properties this year, as their collective plans represent the largest amount of new properties in more than a decade, warns Asia Plus Securities. Meanwhile, unsold properties present a high level of risk and might exceed a total value of 1 trillion baht.
The word of caution comes as developers are eager to finish projects that have been on hold since the pandemic, leading to a bottleneck in the market, followed by a subsequent outpouring of “new” projects this year.
One such project is SC Asset’s The Villa — 28 Chidlom on Chidlom Road in central Bangkok. According to promotional material. Construction began on the two-building condominium project in February 2016, and was expected to be completed by May 2020. The two-building project comprises a total of 427 residential units spread across 68 floors.
This year, 18 major developers are expected to build more than 300 projects worth a total of about 448 billion baht. By the end of 2021, 14 listed firms reportedly had unsold units worth more than 557 billion baht.
Added together, the expected releases and the existing projects still under development are set to flood the market this year with a collective property value exceeding 1 trillion baht for the first time ever.
According to Therdsak Thaveetheerathum, the deputy director of the research division of Asia Plus Securities…
“Supply will be too great, even though purchasing power still remains in the market. Developers should be wary as demand will be not as high as in 2018.”
The overall presales of Thailand developers totaled 354 billion baht in 2018, the highest amount ever seen. Last year, annual presales had dropped to approximately 250 billion baht.
Based on this year’s projected launches, Asia Plus Securities forecasts a 22% increase from the 262 billion made last year, with 319 billion to be made through presales alone.
“There are a lot of uncertainties today which will disrupt demand. After the Russia-Ukraine conflict eases, there may be a new world balance and it depends on how well each country will be able to adjust.”
Low-rise homes, unlike apartments that have to be built in one go, are usually easier to manage as they can be divided into phases. Therefore, low-rise homes are expected to comprise between 70-80% of total new launches this year.
Thailand developers’ transition to low-rise homes started in 2019, comprising nearly 60% of new projects nationwide, with apartments accounting for the other 40%. Low-rise homes grew to 80% in 2020, before dropping to 70% last year.
With fewer launches last year, the number of unsold apartments was more 100 billion baht in 2021.
Pre-pandemic, new condo launched were strong, with total releases surpassing 200 billion baht in 2017 and 2018. It represented a substantial increase from the average yearly net property value of 120 billion baht from 2010 to 2016.
SOURCE: Bangkok Post
