Bangkok’s midtown and suburban condominium markets are expected to experience a slower year in 2014, as a result of factors including weaker end-user demand and increasing consumer debt.
In its Bangkok Overall Marketview report published late last week, CBRE Thailand also cited the amount of new supply due for completion over the next two years, as well as concerns about how many speculators bought into these projects as negative factors for the market.
The real estate agency also noted concerns about the increasing debt to equity ratios for publicly listed property developers. Cash flow has been reduced and made more
“We expect to see fewer new projects with developers concentrating on selling out and transferring titles of their existing inventory both in completed and incomplete projects,” the agency wrote in its research report.
“There will be limited future supply of larger two- or three-bedroom units in the most prime downtown areas, which is the most popular location for expatriate tenants with top housing rental allowances. With rising expatriate numbers this means that we could finally see expatriate rental rates start to increase.”
CBRE report that the majority of condominium supply is in the midtown/suburban areas of Bangkok, and mainly consists of one-bedroom units. Projects with the highest value, it said, are in the downtown area where there is limited new supply in the most prime locations.
The agency discovered that almost 13,000 new condominium units were completed in the downtown and midtown/suburban areas in Q4 2013, with less than 10 percent of those units located in the downtown area. This brings the supply in the downtown and midtown/suburban areas to approximately 390,000 units, of which more than 70 percent are in the midtown/suburban area.
The number of new launches in the downtown area has increased significantly by more than 100 percent compared with Q3 2013. This was due to the launch of Ideo Q Chula Samyan with a total of almost 1,600 studio and one-bedroom units which accounted for more than 30 percent of the new units launched in the downtown area.
Newly launched projects in the prime downtown area remain limited. One highlight of the new launches in this quarter was The Diplomat Sathorn (192 units) by the KPN Group with more than 90 percent sold at an average price of THB230,000 per sqm, higher than other projects in the immediate area.
Much of the built but unsold inventory in the downtown area has been cleared, and with limited new supply the prices of buildings in the best locations are rising.
Read the full CBRE Bangkok Overall Marketview Report here.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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