A real demand in Bangkok for single house and townhouse units along with concern over the country’s economic conditions is seeing residential developers ditch condominiums and plan to launch more low-rise projects this year, the Bangkok Post noted. Other reasons developers are moving to build more low-rise developments include an over supply in condos in certain market segments and a rise in land costs to build condos.
Charan Kesorn, managing director of Pornsanti Co, a low-rise developer and subsidiary of L.P.N. Development, explained to the newspaper that the low-rise residential market should continue to see steady growth because of the segment’s lower volatility when compared to condominiums.
“The market growth of the low-rise segment is not as rapid or high as condos because low-rise buyers represent real demand,” he told the Bangkok Post. “Condo buyers include both real demand and investors. Their liquidity is not constrained because condos are easy to sell or rent.”
Last year’s economic slowdown saw individual condo investment decrease when compared to previous years as many investors were hurt by the stock market downturn. This in turn led to property investment, particularly for condos, slump, Samma Kitsin, director-general of the Real Estate Information Center (REIC), noted. “The tepid economy and poor market sentiment saw some condo investors unable to move their units to raise proceeds for new investments,” he added.
Several developers froze, postponed or altogether canceled new condo launches in 2015 as poor pre-sale numbers were recorded and the market slowed. Low-rise housing supply has declined more than seven percent in the last six months as more buyers flock to this segment, the Post stated. The REIC believes that new housing supply introduced will trend away from condos and towards the low-rise segment.
The reasons behind this include the aforementioned condo market slowdown as well as new transportation routes starting to take shape. There are many new locations available for developers to build low-rise projects because of the soon to operational mass transit lines, including the Purple Line that will run to areas where there could be real demand from buyers.
