A total of 10,380 condominium units were launched in Bangkok in the first quarter of 2017, which was dramatically less than in the fourth quarter of 2016, largely because some developers continued to lack confidence in the market. However, the fourth-quarter figure was unusually high compared with the previous few years because some units were launched as new projects in that period.
Forty-six per cent of the condominiums launched in the first quarter of 2017 were located in the Bangkok suburbs beyond existing BTS and MRT lines, but along new mass transit lines under construction, reflecting a strong ongoing trend.
Since most developers continue to lack confidence in new condominium demand, many have increased the proportion of single detached house projects in 2017. Listed developers in particular see single detached house buyers as representing real demand. As well, a house sale can generate revenue for them in only a few months, which cannot be said of condominium projects. Nevertheless, all developers are continuing to launch condominium projects in 2017, albeit after having carefully monitored the market.
Some areas along new mass transit lines under construction have become popular locations, especially areas not too far from Bangkok's inner city.
The total number of condominium units launched this year may not differ dramatically from the 2016 total of around 40,000 units, yet much will depend on how developers perceive purchasing power during the remainder of 2017, as well as Thailand's general economic situation.
New mass transit lines continue to be a positive factor for the condominium market, since many developers are seeking good locations. Consequently, areas along the Blue and Orange lines will become new areas of interest for condominium development in the coming years.
Demand: The New Residence Buyers' Confidence Index, compiled from a survey by the University of the Thai Chamber of Commerce, increased steadily from 62.4 in December 2016 to 68 in March 2017, its highest level in many months.
The improvement appears to reflect positive signs in Thailand's economy and an absence of some of the negative factors that affected the figures in 2016.
The average take-up rate for all condominium units launched in the first quarter of 2017 was approximately 60%, which was similar to that of the past few quarters, but lower than the average for newly launched units in the third quarter of 2016.
The average take-up rate for newly launched units in the first quarter of 2017 was, however, higher than in the fourth quarter of 2016, which reflects improving confidence among homebuyers and consumers in general.
Overall demand for residential units in 2017 will probably be similar to that of 2016, with little movement expected in demand for newly launched condominium units, given the availability of so many units still waiting to be sold.
In addition, many developers have been seeking to release all available units as soon as possible. Therefore, they have been discounting their selling prices or offering special marketing campaigns for ready-to-move-in units in an attempt to clear their inventories.
But even though a government stimulus programme that included reductions in property transfer rates and taxes expired at the end of April 2016, the purchasing sentiment of Thais has improved steadily, resulting in many condominium projects launched in the third quarter of 2016 achieving high take-up rates.
Price: Land prices continue to climb in the capital region, reflecting demand for good development locations near new mass transit-lines under construction, plus the limited availability of land plots in prime Bangkok areas and sites around existing BTS and MRT stations.
High land prices have also directly affected the selling prices of condominium units launched in the past few years, with average prices moving higher quarter after quarter. Some new condo developments in areas close to BTS stations are already commanding prices above 250,000 baht per square metre.
Average selling prices of newly launched projects in recent years have been rising by 5-10% per year and will continue to increase in 2017. However, selling prices also depend on the location, the developer, and the project concept.
Another major factor directly affecting sales of new condominiums in Bangkok is the many second-hand units still available in the market with lower prices, meaning that new and second-hand units in the same location and of comparable quality will compete for sales. n
Surachet Kongcheep is associate director for research at Colliers International Thailand. He can be reached at surachet.kongcheep@colliers.com