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SG Fewer launches, higher prices in Bangkok

Property Here - Wednesday, November 06, 2013

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Fewer condominiums were launched in Bangkok during the third quarter of 2013, while average prices rose marginally quarter-on-quarter and remain more than 22 percent higher than those seen during the first three months of this year.

In its Bangkok Condominium Market report, Colliers International (Thailand) noted that approximately 11,240 condominium units were launched in the third quarter of 2013, down by around 1,330 units from the previous quarter. It reported that many more projects are planned for launch during the last quarter.

The average price of all condominium units in Q3 2013 was similar to the price in the previous quarter. Although most condominium projects were launched in the Urban Bangkok Area, the average price in the City Area was lower than in the previous quarter.

The take-up rate of newly launched units in Q3 2013 was approximately 52 percent lower than in Q2, with projects in the City Area, Suburban Bangkok and Northern Fringe Area attracting the most interest.

According to statistics from the Department of Land and reported by the agency, approximately 2,600 new condominium units were completed and registered in Q3 2013. The total number of condominium units in Bangkok now stands at approximately 378,000 units. 

A shortage of construction workers remains the major problem for all developers, and many condominium projects have delayed their completion dates to next year, the report said.

The average take-up rate for new condominium projects launched in the third quarter of 2013 was only around 52 percent, lower than in the previous quarter. Many condominium projects were launched in September and had a low take-up rate. 

The average take-up rate in the City Area is the highest at approximately 76 percent, although the average price of newly launched condominiums in this location is higher than THB140,000 per sqm. However, these units are in good locations and not far from BTS stations. The average take-up rate in the Suburban Bangkok Area came second at approximately 68 percent.

The average price of all condominium units launched in the third quarter was THB82,900 per sqm, somewhat higher than in the previous quarter (THB82,010 per sqm), but higher than the average price in the first quarter by more than 22.5 percent.

In addition, the average price in the Eastern Fringe Area was also higher than in the City Area at nearly THB149,000 per sqm, the highest in the past few quarters, and was due to the launch of new projects by listed developers in the third quarter.

Colliers noted that the average selling price of most condominium launches in the third quarter of 2013, or approximately 60 percent, was in the range of THB60,00 to THB80,000 per sqm sector, with most projects targeting buyers in the middle income bracket. Many condominium projects launched in the past few quarters focused more on mid-to-low income buyers, especially in the Suburban Bangkok Area, but these have been affected by the increasing household debt during past few quarters. 

In addition, all commercial banks have become stricter in approving mortgage loans and many buyers who are considered un-creditworthy have been unable to take possession of their residential units. This problem has directly affected all developers because all forfeited units have to be re-sold and this may impact developers’ cash flow. Thus, most developers are targeting middle-income or higher earners and building along existing mass transit lines.

The report predicted that more than 60,000 units are scheduled to be completed in the last quarter of 2013, but the labour shortage problem has affected all property sectors in Thailand. Most condominium projects in Bangkok have delayed their construction progress and postponed completion to next year. In addition, the labour problem will continue to grow and affect the property sector.

More than 80 percent of all condominium projects launched in the third quarter of 2013 were developed by listed companies or their subsidiaries. During the past few years all listed developers have launched sub-brands for the mid to low-income level in order to cover all market segments. All new and SMEs developers were affected by this strategy which made them study the market more thoroughly before launching new projects, otherwise they might launch projects in the same segment and in the same location as listed developers. In addition, the condominium market will become a big-name developer market in the future.

In its summary, Colliers said: “The Bangkok condominium market still has room to growth and there is no strong indication of an oversupply crisis, although a high number of new condominium projects were launched during the past few quarters and some of them still have units available. 

“While many condominium projects from well-known and reliable developers were sold out or received a high take-up rate there were some which were unsuccessful.

“Developers are monitoring the condominium market situation all the time, and they are now targeting their new launches in the third quarter at higher-income buyers, with higher prices and in the Urban Bangkok Area. This is because household debt has affected the mid-to-low income bracket earners, so that all developers will in the future focus more on the middle-income group. However, for some of them it will be difficult to leave the low-income market.