Thailand’s property market has performed below expectations according to Thanachart Securities.
This is despite forecasts taking into account new regulations enforced on 1 April 2019 making it harder to obtain a mortgage and to penalize investors looking to buy a second or subsequent home. Thanachart Securities, a subsidiary of Thanachart Bank, has released data illustrating weak pre-sales performance for the second quarter of 2019.
Using data collected from seven residential developers, Thanachart Securities, noted that this quarter saw levels lower than the past 10 quarters which is a direct result of reduced loan-to-value rates for anyone looking to invest in an additional property.
The decline was across all property types although condominiums, which are often considered to be the most lucrative investment asset in Bangkok, saw the biggest drop at 44 percent followed by houses decreasing by 20 percent. Figures that are amplified further by a weaker economy resulting in less consumer spending power.
Thanachart Securities estimate that these reduced transactions will result in a 31 percent year-on-year drop and 7 percent quarter-on-quarter to THB 43.2 billion. Developers who have been in tune to this market performance shift have adjusted accordingly.
For example, AP (Thailand) Public Company Limited have pitched clearing campaigns to lure in investors and coincidentally are expected to secure pre-sales growth of 9 percent year-on-year and 38 percent quarter-on-quarter.
Similarly, Pruksa Holding is predicted to obtain 5 percent pre-sales growth due to two new projects: Chapter Chula-Samyan in Bangkok’s Silom area, where 80 percent was pre-sold and Chapter Charoennakorn, not far down the road, where 40 percent was pre-sold.
These figures suggest that despite an overall weakening market there is still an appetite for property and developers need to carry out feasibility studies ahead of new projects ensuring that they select the right location for their next build. A mantra which has been echoed a long time by DDproperty.
Since overall pre-sales are down due to a speculative investor taking a back seat in light of new regulations and a slower economy that is reducing overall demand, many developers are experiencing larger condominium inventories taking longer to sell units and at a lower profit margin. Consequently, Thanachart Securities expect condominium demand to fall 31 percent for the first half of 2019.
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