Factors that Affect the Condominium Market in 2019 and Outlook for 2020
Economic Situation
- Global economic slowdown
- Low growth of Thai economy
- US-China trade war
- US-Iran conflict
- Strong baht
Consumer Purchasing Power
- High household debt
- Bank of Thailand LTV control policy
- Strict home mortgage requirements from financial institutions
Demand/Supply
- Surplus of condominiums for sale
- Demand fell due
to:
- Foreigners’ purchasing power decreased
- Speculators and investors left the market
- Main buyers purchased property as their own residences
Government Policy
- Property and building tax increase
- Factors that
stimulate the real estate market:
- Registration and transfer fees decreased for properties priced at less than 3 million baht
Down payment requirements dropped by 50,000 baht for 100,000 homes
Outlook for Condominium Market in Bangkok for 2020
- Rate of Bangkok condominium supply growth dropped more than 30% in 2019, and appears to decline further in 2020.
- Purchasing power in 2020 is more stable compared to 2019, at 35,000 units.
- Trends indicate a more balanced market in 2021.
- Prices tend to remain stable or be on the decline.
- Development of new condominium projects is likely to spread to the suburbs along the new developing train lines.
- Developers will slow the launch of condominium projects and their divert attention to other real estate sectors that can generate long-term income such as hotels and offices.
- New project developments will include mixed use development projects, which avoid the risk of being dependent on a single market.
- Developers have revised their plans to launch more low-rise residential projects such as single-family homes, townhouses and semi-detached houses, as the condominium market is declining in 2019.
- There will be a lot of new supply of leasehold condominiums from this point onwards.
- There is very little chance of the real estate bubble crisis similar to the crisis in 1997.
- Small developers or those without strong reserves will disappear from the market.
- The demand for condominiums depends only on the demand from end users. The decrease in the number of investors is due to the LTV Policy and the decrease in the number of foreign buyers, given the strengthening baht and the global economic downturn.
- As for the price war in the condominium market in Bangkok, developers no longer set condominium prices – they are determined by buyers.
- Competitive prices, styles and functions of condominiums that meet buyers’ needs will win the hearts of customers today.
- The government promotes the economy by launching mega projects to increase spending.
• The Peripheral Area of Bangkok (31,404 units from 46,709 units) comprised 67% while Outer Sukhumvit had the most quantity in the Peripheral (8,402 units from 31,404 units) or 27%.
• Ratchada / Rama 9 / Lad Prao remains the area in the City Fringe with the most condominium launches.
• The Sukhumvit area, including Inner Sukhumvit (sois 1-63 and 2-42), Mid-Sukhumvit (44-70 and 65-103) and Outer Sukhumvit (Bearing to Samrong) marks the area with the most new condominium launches.
• The highest selling prices of newly launched condominiums were those in the 80,000 to 150,000 baht per sq.m. range or those in the 1-bedroom segment priced at 3-5 million baht
• The sales rate of new condominiums launched in Bangkok in 2019 was 45% or 20,990 units
• The sales rate of new condominiums dropped from 2018, which had a rate of 58% or 39,875 units
• Newly launched condominiums in the Peripheral of Bangkok had the highest number of units sold at 12,665 units, followed by those in the City Fringe at 4,600 units and the Central Business District (CBD) at 3,725 units
• Newly launched condominiums in the City Fringe had the highest sales rate, at up to 56%
• Newly launched condominiums in the CBD that sold well were in the Sukhumvit Area (sois 1-63 and 2-42), with sales of 1,242 units
• Newly launched condominiums in the City Fringe that sold the best were in the Mid-Sukhumvit Area (sois 44-70 and 65-103), with sales of 1,385 units, followed by Ratchada/Lad Prao/Rama 9 area, with 1,336 units sold
• Newly launched condominiums in the Peripheral that sold the best were in Southern Bangkok, at 3,443 units, followed by Northern Bangkok, with 3,426 units sold
• Newly launched condominiums near the mass transit system, like those near the Blue Line that opened for service in 2019, include those in the vicinity of Issaraphap-Tha Pra-Bang Fai-Phetkasem 48-Phasi Charoen Stations
• The price levels of newly launched condominiums that sold well included condos with selling prices in the 80,000 to 150,000 baht range or those in the 1-bedroom segment priced from 3-5 million baht.
