Bangkok--30 Jun--Oasis Media
Thailand’s real estate market conditions keep worsening since the last quarter of 2008 as the world’s financial crisis exploded and the country’s economy being influenced. These negative impacts certainly aggravate because of the continued domestic political turmoil. Worsening economic conditions have resulted in decreasing demand in all sectors of the property market. In the fourth quarter of 2008, there are total 13 condominium projects, with about 2,373 units, were completed. The total units completed during this quarter were about three times compared to the total units completed in the third quarter of 2008 with just 819 units from six projects. This does not mean the market is turning to normal but just the beginning of cloudy days ahead.
Total new condo supply during the first half of 2008 was 1,807 units; equal to 23% of the total newly completed Bangkok condos expected in 2008. Both occupancy rates and the total number of occupied Bangkok condos improved slightly in the second quarter of 2008. The overall average occupancy rate for downtown Bangkok condos was 84.4% in the second quarter of 2008, up 0.2% quarter on quarter. The total number of occupied condos grew from 42,560 units in the first quarter of 2008 to 43,143 units in the second quarter of 2008.
Due to all recent political incidents in Bangkok, the condominium market has totally changed in 2009. Economic instability and political turmoil have also resulted in shrinking the Bangkok condominium market in the first quarter of 2009. The new supply in the sector has fallen sharply by 36 percent compared to the same quarter of the last year, with just 1,671 units launched in the first quarter of 2009. On the other hand, the selling price showed a minor increase, with just 1.1 percent up in the first quarter.
Most of the new condominium project launches prefer to be located along Bangkok’s mass transit routes for the convenience of condo buyers, with 35% of downtown condominium units are located in the Sukhumvit area, followed by projects in Silom/Sathon (20%), Rama III (17%), Chao Phraya Riverside (12%), Pathumwan (9%) and Central Lumpini (7%) respectively. The average selling price for condominium units in Bangkok’s CBD area stands around Bt 120,000 per sq. m. The total supply of downtown Bangkok condos grew by 1.1% quarter on quarter and 9.5% year on year in the second quarter of 2008, reaching 53,077 units, an increase of 572 units.
Figure-Bangkok’s CBD stock and new supply for condominium market from 2003-2011 (Forecast)
The above graphic figure shows that there is annual increasing new supply for condominium units in Bangkok. This means that Thai people are changing their lifestyle so much just like people living in Singapore, Tokyo and New York where people must live and work in the large and busy metropolitan environment.
Statistical figures of Bangkok condo market
2008
2009
Supply
(Forecast)
Existing Supply (units)
53,077
65,000
New supply under construction (units)
18,934
12,000
Demand
Occupancy Rate
84.4%
80%-84%
Price
Future high-end project asking price (Baht/sq. m)
152,000
153,000
Achieved resale price (Baht/sq. m)
102,000
103,000
Average price for high-end projects (Baht/sq. m)
156,000
156,000
Average resale price (Baht/sq. m)
104,000
104,000
The Bangkok condominium sector, especially the high-end and medium ranges, which had rapid growth over the past few years, has seen new project diminishing as developers have reacted to the reduction of new demand. The main targets for Bangkok condo market are young and working people because they are the main and frequent commuters along Bangkok’s MRT and BTS train systems. With the globalization reaching every corners of the world, Bangkok people will gradually adapt to living in condo and the demand for new condo projects will definitely be growing. Since property developers must postpone new project launches in response to the depressed demand, there are predictions that new supply for the second quarter is likely to reach similar level as that of the first quarter of 2009.
There are many critical factors in determining the state of Bangkok condo market which include the ability of developers to punctually complete projects and to the quality promised, along with buyers’ ability and willingness to transfer units. In 2009, with project financing becoming more difficult, we are able to foresee that in order to deal with financial crisis several property developers are planning bond offerings for fund raising as banks and financial institutions are tightening credit. With the current political and economic situation in Thailand, we have to expect the year 2009 to be a difficult year for the downtown condominium market, as the current projections have as many as 12,000 condo units to be completed in 2009, of which about 7,000 units are scheduled to be completed in the first half of 2009; thus making the total condominium units in Bangkok reaching approx. 65,000 units. Since Thailand’s economic and political situation is unpredictable, there have been a lots of foreigners fleeing Thailand or changing their retiring plans. The numbers of foreign tourists visiting the country is sharply decreasing. In the near future, Bangkok’s condo market is not a paradise for luxury condo buyers and developers as it was before, but the luxury condo segment will be reserved for long term investment.
Further information please contact Oasis Media Co., Ltd Tel. 02-937-4735
Khun Chatchaval Teened / Saranyarat Suwannakham
email:[email protected] / [email protected].