Bangkok’s condo oversupply puts pressure on prices

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Bangkok’s Condo Oversupply Puts Pressure On Prices

An abundance of condominiums is creating a buyer’s market in Bangkok at a time when Thailand’s economy stumbles and amid stricter mortgage-lending rules .

Some 65,000 new apartments were added to the city last year, an 11-per cent increase over 2017 and the most since 2009. Demand, however, is lukewarm with developers reporting take-up rates of just 55 per cent and average asking prices decreasing six per cent year-on-year, Bloomberg cited from a Knight Frank report.

“It’s a chance to get into the market as home builders look to clear excess stock at lower prices,” said to Aliwassa Pathnadabutr, managing director of CBRE Thailand.

“The overall condominium market will be slower this year, but there are still opportunities in some locations with the right product at the right price,” she said, adding that “we believe the market is entering an equilibrium stage where prices will be adjusted to a more realistic level.”

Thailand’s finance ministry cut its economic growth forecast last month, predicting the slowest expansion in three years as the country grapples with moderating exports and heightened political risk after disputed elections. Revised mortgage-lending rules that came into effect in April may also limit the appeal of real estate because they restrict how much money some second-home buyers can borrow.

Bangkok is also being impacted by a drop in Chinese visitors. Chinese investors have historically made up the bulk of foreign property buyers in Thailand but their presence has waned as China’s economy slows and capital controls limit outflows.

CBRE said in a 2019 real estate market outlook report that it was concerned about Thailand’s high reliance on foreigners.

“Most of the recent foreign buyers are investors and CBRE doubts they will live in the units they have bought. Foreign sales are highly sensitive to economic conditions of the buyer’s home country,” the report said.

Adding to that, Thailand is imposing a quota of a maximum of 49 per cent for foreign buyers of condominiums which means that each development must sell at least 51 per cent of living space to Thai nationals.

And it isn’t just Bangkok that’s hurting. A total of 454,814 residential units across the country were left unsold last year, with a value of $41 billion, according to Sopon Pornchokchai, president of the Thai Agency for Real Estate Affairs.

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An abundance of condominiums is creating a buyer’s market in Bangkok at a time when Thailand’s economy stumbles and amid stricter mortgage-lending rules . Some 65,000 new apartments were added to the city last year, an 11-per cent increase over 2017 and the most since 2009. Demand, however, is lukewarm with developers reporting take-up rates of just 55 per cent and average asking prices decreasing six per cent year-on-year, Bloomberg cited from a Knight Frank report. “It’s a chance to get into the market as home builders look to clear excess stock at lower prices,” said to Aliwassa Pathnadabutr, managing...

Reading Time: 2 minutes

Bangkok’s Condo Oversupply Puts Pressure On Prices

An abundance of condominiums is creating a buyer’s market in Bangkok at a time when Thailand’s economy stumbles and amid stricter mortgage-lending rules .

Some 65,000 new apartments were added to the city last year, an 11-per cent increase over 2017 and the most since 2009. Demand, however, is lukewarm with developers reporting take-up rates of just 55 per cent and average asking prices decreasing six per cent year-on-year, Bloomberg cited from a Knight Frank report.

“It’s a chance to get into the market as home builders look to clear excess stock at lower prices,” said to Aliwassa Pathnadabutr, managing director of CBRE Thailand.

“The overall condominium market will be slower this year, but there are still opportunities in some locations with the right product at the right price,” she said, adding that “we believe the market is entering an equilibrium stage where prices will be adjusted to a more realistic level.”

Thailand’s finance ministry cut its economic growth forecast last month, predicting the slowest expansion in three years as the country grapples with moderating exports and heightened political risk after disputed elections. Revised mortgage-lending rules that came into effect in April may also limit the appeal of real estate because they restrict how much money some second-home buyers can borrow.

Bangkok is also being impacted by a drop in Chinese visitors. Chinese investors have historically made up the bulk of foreign property buyers in Thailand but their presence has waned as China’s economy slows and capital controls limit outflows.

CBRE said in a 2019 real estate market outlook report that it was concerned about Thailand’s high reliance on foreigners.

“Most of the recent foreign buyers are investors and CBRE doubts they will live in the units they have bought. Foreign sales are highly sensitive to economic conditions of the buyer’s home country,” the report said.

Adding to that, Thailand is imposing a quota of a maximum of 49 per cent for foreign buyers of condominiums which means that each development must sell at least 51 per cent of living space to Thai nationals.

And it isn’t just Bangkok that’s hurting. A total of 454,814 residential units across the country were left unsold last year, with a value of $41 billion, according to Sopon Pornchokchai, president of the Thai Agency for Real Estate Affairs.

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