Diversification and Caution Grip Bangkok’s Residential Market.

13 ม.ค. 2563

As we bid farewell to 2019 and enter a new decade, real estate firm CBRE looks back on the resident market that they quote as being ‘very challenging’ for Bangkok.

Slow economic growth, high household debt, and increasing supply have been common themes throughout the year continually blamed for the market’s sluggish nature despite 2019 starting in good stead.

Couple this with a particular strong Thai baht and Bangkok property for many foreign investors is a little less enticing, hence the slowdown in this sector of buyers.

During more stagnates market cycles the assumption often veers towards reduced property prices. However, developers are not necessarily in a position to venture down this path due to high building costs off the back of increased land prices.

Instead, developers have delayed new site acquisition and held back on property launches to avoid flooding the market so much so that CBRE research reveals that only 1,268 units were launched for the third quarter of 2019, the lowest since the same period in 2015 and a decrease of over 80 percent from Q3 2018.

Both the Bank of Thailand and the Government are attempting to buoy the market. Although CBRE believes that with inadequate funding, incentives such as reducing transfer rates and mortgage registration fees have little impact. Instead, developers need to look to diversify their assets over several property types rather than solely relying on residential to produce a lucrative performing property.

There is a big gap between supply and demand for affordable housing in Malaysia

Aliwassa Pathnadabutr, Managing Director of CBRE Thailand, commented,

“With the growing uncertainty in the residential market, developers will need to minimise and diversify investment risks, creating a more diverse revenue stream. Many developers have already started looking at recurring-income properties or mixed-use developments, especially on large land plots, to make their projects more attractive, with complementary uses in a single compound. Key resort destinations like Hua Hin, Pattaya, Phuket and Krabi present opportunities for developers as Thailand’s infrastructure is expanding significantly and tourism industry remains as strong as ever.”

For individual investors, affordability remains key for 2020. Price increases are forecast to remain on their slow trajectory to keep buyers interested and to gain traction. The need to carry out research ahead of making a property purchase is required more than ever while speculative investors have shied away since ‘flipping’ Bangkok properties for a profit ahead of completion is no longer a dead cert.

 

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