EXCLUSIVE: CBRE Thailand has elaborated on its warning earlier this week that condominium markets in midtown and suburban Bangkok are reaching saturation levels.
In its Bangkok Residential Marketview Q4 2013 report, the real estate firm expressed concerns about saturation in a number of midtown and suburban locations in Bangkok, especially taking into account the number of completions scheduled to happen during the next two years.
Responding to questions from DDproperty.com, a spokesperson from CBRE Thailand’s research department, said: “Our concern is the whole midtown and suburban market because of the volume of new supply due to be completed in 2014 and 2015. We expect that more than 60,000 midtown and suburban condominium units will be completed in 2014, and a similar number in 2015.
“We believe the risks are that developers of some of projects collected very low down payments of 10 percent or less during the construction period, which could have encouraged speculative buyers – that is buyers who intend to resell before completion.
“Some of these speculative buyers may not be able to resell their unit at a profit if they cannot get a mortgage, then possibly they will not complete the sale leaving developers with built but unsold inventory.
“This will vary significantly from project to project, and so it is not possible to identify specific areas that would be affected at this stage.
The spokesperson also expressed concerns about projects being developed by smaller, less experienced developers.
“Many of these projects are low-rise developments on small land plots in less prime locations. Our concerns lie in their ability to sell out all the units without having the marketing resources of large developers”
In its research report CBRE Thailand is predicting a slower year for the midtown and suburban sectors, due to many factors such as the amount of new supply due for completion over the next two years, and concerns about how many speculators bought into these projects. This, combined with weaker end-user demand due to the on-going political crisis, increasing consumer debt and a more cautious approach to developer financing from the banks, will likely result in fewer new projects as developers focus on selling and transferring titles of their existing inventory in completed and yet-to-be-finished projects.
Read the full CBRE Bangkok Residential Marketview Q4 2013 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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