Foreign buyers dominated the condo market in the first quarter of 2024, with new launches focused on major tourist destinations, amounting to a combined investment value of more than 56.6 billion baht.
Phattarachai Taweewong, director of the research department at property consultant Colliers Thailand, said the quarter marked the first instance of more condo launches in major tourist destinations than in Bangkok.
"We've never witnessed such a significant amount of new condo supply outside Bangkok before," he said. "The key driver behind this trend was demand from foreigners, particularly Chinese and Russians."
The most condo launches for the quarter was in Pattaya, with 4,493 units valued at 16 billion baht. This followed a total of 3,302 units launched last year, a 132% surge from 2022.
The majority of these launches derived from large-scale projects by listed developers, including AssetWise and Origin Property.
Colliers expects new condo launches in the remaining three quarters to predominantly come from local developers.
"The significant volume in the first quarter was to cater to robust demand, both for own use and investment purposes," he said. "Some Chinese and Russians even purchased entire blocks of new projects to lease them to fellow nationalities."
By the end of 2024, Colliers expects the number of new condo launches in Pattaya to have reached 7,000 units.
However, a healthy amount should typically fall within the range of 3,000 to 5,000 units per year, Mr Phattarachai suggested.
"If exceeding this amount, the market will be in an oversupply situation again, as in 2013-14 when more than 10,000 units were launched annually," he cautioned. "The market at that time took several years to absorb the excess supply."
The oversupply during those periods had a significant impact as 27 projects featuring about 9,000 units halted sales activities until now. Colliers is monitoring whether these projects will return to the market or not.
Following Pattaya, Phuket was the second destination seeing overwhelming new condo supplies with 3,338 units from 12 projects and a combined value of 25 billion baht.
This figure followed the historic high of 8,743 units launched last year, representing a growth of more than six times compared to 1,419 units in 2022, and surpassing the previous peak of 6,429 units in 2012.
The Phuket market is expected to launch 8,500 new condo units by the end of 2024.
"Before the pandemic, condos selling at 120,000 baht or more per square metre were very rare in Phuket. Today, the typical prices range between 150,000-180,000 baht per sq m," Mr Phattarachai said.
In Bangkok, new condos in the first quarter of 2024 tallied 3,288 units, a 33% decrease from the same period of last year, and the lowest in the past 15 years.
"The Bangkok condo market has slowed down since the third quarter of 2023 as developers are in a conservative mode," said Supasit Vitooraporn, a property analyst in Colliers' advisory services department.
Mr Supasit said one of the key issues was the high mortgage rejection rate, particularly among lower-priced segments of 3 million baht and lower, which had a rejection rate of 70%.