In its latest Bangkok Residential Market View report, real estate firm CBRE noted how consumer confidence has risen from the first quarter this year, following the May 22 coup. However, is added, the slowdown in sales, new launches and re-sales in the overall condominium market has persisted in Q2 2014.
“We are not significantly worried about the downtown market since there is limited new supply and a small amount of built but unsold inventory,” the firm noted, adding: “We forecast that there will be an increase in downtown sales, new launches and resales in the second half of this year.
“We believe that prices in completed and under construction projects in the downtown area will continue to rise.
“Land prices have not fallen so new projects will have to be priced at levels higher than the existing projects.
“Our concern is mainly focused on the midtown and suburban market where developers have been building similar one-bedroom products.”
The report explained that the payment terms for the midtown and suburban condominium market are 10 percent upon contract signing and the remaining 90 percent of the total price on completion and transfer of the title.
CBRE is concerned that speculators will default if they cannot resell their units and developers have been reporting cancellation rates as high as 20 percent.
Banks have also tightened their mortgage lending criteria and some buyers may not be able to transfer because they cannot get the loans. In addition, banks have also been tightening the loan criteria for developers. Therefore, it will become more difficult for developers to raise capital to finance new projects unless those projects achieve more than 50 percent presales.
“The completion of these units will be a significant stress test for the market at a time of reduced demand,” CBRE concluded.
Andrew Batt, International Group Editor of PropertyGuru Group wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
