The Bangkok condominium market has slowed down due to the accumulation of unsold stock and the tightening of mortgage lending regulations.
This has caused buyers to be more careful, resulting in less demand from speculators and more emphasis on real demand.
This explains why developers are shifting their overall development portfolio to the low-rise housing market where demand for single-detached houses and townhouses is driven entirely by Thai end-users and owner occupier purchasers.
House purchasers have specific needs in terms of location, size, design and functionality. They also have a fixed budget. As such, developers need to focus on these needs and deliver the right product in the right place at a price people can afford.
Developers are capitalizing on new popular locations such as the Srinakarin-Rom Klao area, which has become popular for housing developments because of improvements in the road network and expansion of the mass transit system.
At the end of 2018, Origin Property and Central Pattana adapted to the change in residential market conditions by transitioning from mainly condominium development and launching their first housing projects.
Origin Property launched Britania Srinakarin and for Central Pattana, Niyam Borommaratchachonnani. Other developers also started to develop their first housing projects, such as Major Development that have launched their first luxury single-detached housing project on a 12-rai site on Krungthep Kreetha Road called Mavista Prestige Village.
More developers will focus on the low-rise housing market.
Demand is not expected to grow significantly unless there is a big improvement in the economy and potential purchasers’ disposable incomes. With fixed levels of affordability and buyers’ minimum size requirements, the only way to increase the volume of sales is to produce housing products at lower prices.
This may be possible as new roads and mass transit lines make land price cheaper in locations that are attractive to purchasers.
If it is not possible to produce lower priced product, then more developers will be fighting for a share in an unchanged level of demand. Competition will increase and only those developers who can produce attractive products at affordable prices will be able to sell.
An article written by Malin Phlernjai, an Analyst at Research & Consulting, CBRE Thailand for Bangkok Post dated 1 May 2019.
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