Bangkok condo sector divided
by Ray Clancy
The condominium property sector in Bangkok is clearly split into two areas that are at different stages of their cycles, according to the latest quarterly Residential Sales Market View for the third quarter of 2010.
The market for larger downtown units has been slow with few new project launches and the clearing of constructed but unsold inventory by developers using discounts and promotions, the report from CB Richard Ellis reveals.
The focus for new development has been small one bedroom units generally sized between 35 and 40 square metres and priced at THB2 to 3 million. The third quarter saw a significant increase in the launches of this type of project both in downtown and midtown locations.
The Bank of Thailand, concerned about the rate of new launches and the level of speculative and buy to rent buyers intervened with its announcement on 12th November that banks should not use a loan to value ratio of more than 90% for condominiums priced at less than THB10 million as from 01 January 2011 and that loan to value ratios should not be higher than 95% for houses and townhouses as from 01 January 2012.
‘This was a very mild measure aimed, we believe, as a warning shot to developers, speculators and buy to rent investors because of concerns about the rapid growth in potential future supply,’ says the report.
In the sector for larger units there have been few new launches. Prices for recently completed good quality projects with a limited volume of remaining developers’ unsold inventory have risen slightly this quarter. At developments which have been completed and where developers or investors still have unsold inventory, prices have been discounted in some cases to levels that were originally offered at the launch date, the report also points out.
The average achieved re-sale price of units in completed upscale and above units increased by 12 % year on year. While in the third quarter the average price for an off plan freehold condominium unit, high end and above, in downtown Bangkok was 158,261 an increase of 0.9 % quarter on quarter and 10.9 % year on year.
