The Bangkok condominium market has rebounded after six months of slow sales, a reduction of new launches and a lack of re-sales, with prices expected continue to rise, according to CBRE Residential in its latest global research report.
The report highlighted that following the coup on May 22, there have been signs of recovery in the downtown condominium market.
In particular it spotlighted the successful launch of the Magnolias Riverfront Residence project where more than 150 of 379 units were booked prices over THB200,000 per sqm before the presales event. This, according to CBRE, proves that sentiment in the luxury condominium market has begun to rebound after a six-month slowdown.
The report highlights the fact there are two separate condominium markets in Bangkok: downtown and the midtown/suburban market.
“We are not significantly concerned about the downtown market since there is limited new supply and a low level of built-but-unsold inventory; our concern is focused mainly on the midtown/suburban market, where developers have been building similar one-bedroom products.
“The completion of more than 100,000 condominium units in 2014 and 2015 in this area will be a crucial stress test for the midtown/suburban market at a time of reduced demand.”
CBRE noted that the key indicator will be the number of units transferred compared to units sold.
In the first half of 2014, many well-known listed developers reported a higher default rate, where buyers do not proceed with a purchase on completion of the building – because of both speculators leaving the market and the tightening of lending criteria for property buyers by banks.
Resale units from speculators and existing unsold inventory from developers in the midtown/suburban market will restrict the possibility of prices rising in the midtown and suburban areas, it said.
By contrast, the dynamics in the downtown market have been very different because of limited new supply. About 80 percent of the buyers of luxury downtown properties are Thai, whereas buyers in the midtown and suburban markets are almost 100 percent driven by Thai buyers.
The dominance of domestic purchasers means that the Bangkok market is very resilient, and although the market may experience a slowdown during periods of political unrest, prices have not fallen.
In fact, prices have continued to rise for the most popular properties. Prices for new projects and resale prices for the best condominiums in the best downtown locations are expected to continue to rise, the real estate firm predicted.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.
