Oversupply fears will slow the Thai property market for a couple of months before positive sentiment will resume next year, according to local developers. Mayta Chanchamcharat, director and chief business officer of Pruksa Real Estate said concerns about a possible property bubble in Bangkok and the Bank of Thailand’s announcement capping condominium mortgages at 90 per cent of value from January 1 have quietened the market due to a retreat of speculators and investors.
Real estate experts say medium-priced condos near mass transit are at particular risk of missing their sales targets next year, as developers have built too many.
Condos priced at or below three million baht will likely total 38,000 units this year or 26,000 above one million baht and 12,000 below. Total supply of all types of residential projects was expected to reach 98,000 units this year, much lower than the 200,000 units in the lead-up to the 1997 crisis.
As reported in Bangkok Post newspaper, the take-up rate of newly launched condominiums dropped to 45-50 per cent this year from 70-90 per cent in previous years.
However, Mayta believed that the central bank’s measure should not have a negative impact on the property market. The curb would also be beneficial for the industry as a whole as it will allow the market to adjust in terms of demand and supply.
On the other hand, Pruksa’s executive vice-president Wirote Kappiyajanya was confident that improving economic factors would soon bring back positive sentiment.
Many developers may be delaying their project launches for the moment to keep an eye on whether the situation will become as many have feared. But the impact will only linger for three to six months before giant developers resume their project expansion again
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Thailand Property Outlook
I feel strongly that foreign nations need to be more responsible in determining whether to implement a blanket travel warning, because the impact of doing so affects the livelihoods of millions of Thai citizens.
Being a developing country, the cost of property in Thailand is much lower than in the more developed European markets. But, on the other hand, prices for Thai property, in general, are rising at a much faster rate.
Real estate developers in 2010 are more cautious
As a result, the financial condition of most major housing developers in Thailand is much more robust than in the past. The development of the local bond markets and increasing domestic savings has the made the industry much less dependent on foreign funds, a significant difference from 1997.