More than 100,000 condominiums are expected to be completed in Bangkok’s midtown and suburban markets during the next 18 months, and this intense pressure of supply has been cited as one of the reasons for the current stagnant, or wait-and-see approach, that has been adopted by many buyers and developers.
In its latest Bangkok Marketview research report covering the first three months of 2015, CBRE Thailand noted that the vast majority of units that were launched during Q1 were by small- and medium-sized developers, with more well-known developers adopting a more cautious attitude, according to the real estate firm.
The pressure from the large impending supply, coupled with lower demand as a result of tighter financial controls, as well as a reduction in appetite from speculators are all factors affecting the market right now.
This year will see more than 78,000 midtown and suburban condominiums completed, with another 32,000 predicted to be completed next year.
Once again, CBRE has cautioned about the risk of oversupply, questioning whether speculative buyers of these units – many of whom will have only paid as little as 10 percent as a down payment – will default on their contracts if they cannot resell their units before completion.
End-user buyers are not immune, and CBRE also questions how many will be able to get mortgages – especially those in the lower- and middle-income brackets.
It pointed out that Stock Exchange of Thailand listed developers are only able to recognize revenue once their project has completed and the units have been transferred, so may be forced to discount any completed but unsold units in order to realise revenues and appease shareholders.
