The sales rate for new condos launched in Bangkok in the second quarter fell to historic lows as loan-to-value (LTV) limits, a weak economy and stronger baht dampened demand, according to property consultant Knight Frank Thailand.
Risinee Sarikaputra, director of research, said the sales rate for new condo supply in the second quarter -- 15.7% -- was an all-time low. The previous low quarter was 35% in 2010 during a political crisis.
"The normal quarterly sales rate for new condo launches is around 40-50%," she said. "The sales rate for new condos has dropped since the third quarter last year as there were a large number of new condos launched in 2018."
According to Knight Frank's market research, Bangkok hit a decade-long record for new condos entering the market, with 65,000 new units launched throughout 2018, up 11% from 2017, the highest since 2009.
In the first and second quarter this year, new condo supply launched in Bangkok totalled 12,882 units and 14,988 units, respectively.
The second-quarter sales rate for new condos dropped from 22% in the first-quarter 2019 and 43%, 55%, 60% and 53% in the fourth, third, second and first quarters last year.
To avoid a glut and a low sales rate, Ms Risinee suggested the optimal number of units launched per year be no more than 50,000, the same level as average annual demand.
"New condo supply being launched in the second half should be lower than in the first half -- no more than 27,000 units," she said.
As of the end of June 2019, the number of unsold condo units in Bangkok rose to 92,815 from 89,765 units at the end of 2018. The 2018 amount jumped 26% from 70,822 in 2017, while the average in 2012-16 was 54,800 units.
The largest amount of unsold condo units was in northern Bangkok, in Rangsit, Don Mueang, Sai Mai and Chaeng Wattana, with a total of 21,284 units unsold, accounting for 23% of the total.
This was followed by eastern and southern Bangkok with 15,972 and 15,728 units unsold, respectively.
Knight Frank reported Bangkok had cumulative condo supply from 2010 to the first half of 2019 of 594,453 units with a sales rate of 84%, unchanged from 2017.
The highest cumulative sales rate for condos in the first half this year was in Tao Poon-Bang Sue with a 90.2% rate as the location had only 487 units launched in the first half. Demand in the period was 593 units.
Projects in Sukhumvit sois 65-103 had a sales rate of 88.1%, followed by the central business district (CBD) locations (84.8%), Ramkhamhaeng (83.9%), Sukhumvit sois 105-113 (76%) and Charoen Nakhon-Thon Buri-Talat Phlu (75.2%).
Ms Risinee said a large volume of new condo supply is planned for locations between Sukhumvit sois 105-113 and Charoen Nakhon-Thon Buri-Talat Phlu areas, but developers are being cautious and holding off on launches.
"These two locations should not have launches as their sales rates are not strong enough to warrant new supply," she said.
Knight Frank reported a drop in the sales rate of completed condo units in the first half to 76.1% from 87.7% in 2018.
The average sales price for units in the CBD was 267,281 baht per square metre in the first half, up 2.5% from 260,761 baht in 2018.
For Ratchadaphisek, Lat Phrao and Phahon Yothin sois 1-13, the average sales price was 148,466 baht per sq m, up 2% from 145,556 baht in 2018. In Bangkok suburbs, the average price was 80,312 baht per sq m, up 1.5%.