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.
The trend 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 Thais end-users and owner-occupiers.
Homebuyers 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 capitalising 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.
In late 2018, Origin Property and Central Pattana adapted to the change in residential market conditions by transitioning from mainly condominium development to launching their first housing projects.
Origin Property launched Britania Srinakarin and Central Pattana introduced Niyam Borommaratchachonnani.
Other developers also started to develop their first housing projects. Major Development has 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 have opened up new lower-cost locations attractive to buyers.
If it is not possible to come up with lower-priced products, more developers will be fighting for a share in the segments where demand remains unchanged. Competition will increase and only those developers who can produce attractive products at affordable prices will be able to sell.
Malin Phlernjai is an analyst at Research and Consulting, CBRE Thailand. She can be reached at bangkok@cbre.co.th Facebook: CBREThailand LinkedIn: CBRE Thailand Line@: CBRE Thailand Twitter: @CBREThailand website: www.cbre.co.th