Speculative buyers may be booking units in Thailand’s high-end segment and could decide not to have units transferred to them upon project completion, according to information from the Thai Condominium Association. Condo developers will need to be cautious about this as it can cause them problems.
“It’s unusual for upper-end projects to see buyers queuing up to book a unit. For high-end customers, they won’t buy a unit if they have to take a long queue,” says Thai Condominium Association President Prasert Taedullayasatit to the Bangkok Post.
Unlike other segments where there is a secondary market, the upper-end segment does not have this fall back option. Buyers of low-end condo projects will acquire a unit when construction is complete and then move into the unit, but this does not occur as much for luxury units.
Developers working as part of joint venture agreements have relied on aggressive marketing events to launch projects as these are an effective way to build up presales, but this can also lead to speculators booking units. With more developers now focusing on the high-end segment, they need to put more effort into screening buyers to ensure those taking units will complete transfers.
“Speculative buyers will backfire on developers when the project completes construction, as some of these buyers may refuse to get a unit transferred. We should prevent a situation such as what happened in the provincial condo market five years ago. At that time, many condo projects in major provinces like Phuket, Chiang Mai and northeastern provinces sold out in a short period but had very few unit transfers upon completion,” says Prasert.
Another trend in Bangkok’s property market coming over the next 3 years is an emphasis from developers on high-end, mixed-use projects. There are 8 of these under development in Bangkok at the moment.
“All of these mixed-use projects are on leasehold plots. The leasehold property trend will be not in large-scale projects but in the consumer market, as land prices keep rising higher than people can afford. The government should thus consider an extension of the leasehold period to at least 50 years, so that consumers can afford a condo unit in the city and the bank will give a higher credit line than for a 30-year contract,” says Prasert.
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