Mr. Frank Khan, Executive Director and Head of Residential, Knight Frank Thailand, said, “The Bangkok condominium market in 2020 was inevitably affected directly by the Covid-19 pandemic. Most operators postponed the launches of many projects in 2020, shifting them to 2021 or 2022 instead.
Due to the negative factors surrounding both the pandemic and domestic political turmoil, the sales rate of new projects launched in 2020 dropped by 60 percent compared to 2019, while developers have reduced selling prices by at least 10 to 30 percent for projects that have been completed and are ready for occupancy. This is to clear the remaining units for sale and accumulate some cash. However, activity in the condominium market remains, fuelled by demand from buyers who are looking for accommodations at a reasonable price as well as from investors who have been waiting for the opportunity to buy units at the best possible prices, especially in areas like Sukhumvit and the suburbs.”
Mr. Khan added, “There have been many new condo projects entering the market these past 2 to 3 years, and they are starting to slow down as of late. We see this as a good thing, which helps to balance out supply and domestic demand in the market. Recently, The government stimulus policy for the property market includes the recent approval to cut tax on land and buildings by 90 percent while reducing some registration and transfer fees to 0.01 percent, from 1 to 2 percent, in order to help ease the impacts from Covid-19.
The purchasing power of buyers from China, Hong Kong, Malaysia and Singapore has almost disappeared. Some foreign buyers have bought condominium since 2019, paying the deposit and 20 to 30 percent of the selling price for the agreement and down payment at the time of ownership transfer. Meanwhile, domestic purchasing power remains subdued given the negative economic factors. The banks have also become more stringent in their lending. Even though the interest rate has dropped, we can see that many projects are offering a high discount to make their prices more palatable, attracting domestic buyers that are able and ready.
Keep watch on the second half of 2021. We think that Thailand’s potential, with its robust tourism, public health and medical systems, along with low cost of living, will encourage foreign purchasing power, especially from the Chinese, to return significantly”
Ms. Anchalee Kasemsukthawat, Head of Prime Sales, Knight Frank Thailand, stated “As the negative factors have been prolonged, many owners would like to sell their assets in order to change their investment directions; some have sold assets to have cash on hand. This has led to an increase in the supply of resale condominiums in the market. Most of the buyers in 2020 include Thai investors who have solid footing and cash savings, and they have been waiting to purchase a condominium since 2019. The buyers view this as an opportunity to acquire a condominium at the best possible price, and they are switching from putting their funds in fixed deposits or investing in stocks to buying long term assets; some are purchasing property for their own residences as they require the use of more space for their living needs. The most popular locations for buyers always include Sukhumvit Road, from Chidlom to Thonglor; the New Petchaburi to Rama 9 area; the Ratchathewi – Phayathai – Ari area; and Chatuchak – Ladprao – Ratchada, respectively.The factors that attract buyers, even amidst the market slowdown, are a location with convenient transportation and high discounts.
For 2021, we expect a better outlook in the resale condominium market. At the end of 2020, we started to see signals of improvement from foreign investors who are interested in investing in the prime market in popular locations such as from Chidlom to Thonglor. Although travel to Thailand has been a challenge for foreign investors, a number of them have decided to buy units without having seen the actual condominiums, and there has been constant buying and selling activity. Most of these expat groups are familiar with Thailand, and maintain good knowledge and understanding of investing.”
Ms. Pojaman Vorakitpokathorn, Head of Project Marketing, Knight Frank Thailand, remarked, “The year 2020 is one where we have faced many crises and negative factors that affected businesses, especially those related to airlines and hospitality, and even the condominium market. The number of new condominium projects launched in 2020 has dropped by more than 60 percent to only 22,407 units, when compared with 2019, with 58,256 units.
At the end of 2020, there are two groups of customers who have entered the market, namely, those who have been looking for condos for their own residences and a large group of investors who have bought multiple condos. At this time, buyers have the power to negotiate and get the best prices.
Given the growing concern for safety and hygiene among buyers, the buyers with solid finances will turn to the home market where there is more privacy and safety as well as more living space for expanding their families in the future. Along with various discounts and promotions, it is therefore no surprise that the detached unit or the house market is growing well. In the past year, the house market with units priced under 10 million baht had a 20 to 30 percent increase in the rate of new launches. Meanwhile, new project launches in the house market with units priced at 10 million baht or more remain more or less the same as in 2019.
Consumer behaviour has changed dramatically in this New Normal era, with hygiene and safety being important factors affecting people’s choice of residences. Marketing professionals and residential project designers have studied the new behaviour in order to reach and respond to the needs accordingly. The trend among condominium projects that we will see more in the New Normal era is one that reduces exposure with the Touchless Point, design that provides better ventilation in the common areas in the building, PM 2.5 air purifiers and disinfection efforts in common areas, reduction of common space or less shared spaces, etc.
The government announced real estate market stimulus measures through the “Elite Card Project”, which has a cost of 500,000 baht under the condition that investors have to invest in real estate worth 10 million and up. While the measures are not yet creating the desired impact, we believe foreign investors will return after the vaccine starts to roll out to the Thai people and the mandatory 14-day quarantine period for tourists entering Thailand has been lifted.
As a consultant for residential projects, Knight Frank Thailand is adapting to the situation and the needs of consumers by expanding management, sales and marketing services to single-detached house and townhome projects. Our target is for 3 projects by 2021. For the condominium market, there are still around 3 to 4 new projects that will be launched in 2021.”
