Bangkok: Condo supply to shrink in 2019

Bangkok: Condo supply to shrink in 2019

New condominium supply being launched in Greater Bangkok next year will shrink by 13% to 53,000 units, the same level as the market average the past five years, says property consultant Nexus Property Marketing Co.

Managing director Nalinrat Chareonsuphong said condo demand in 2019 will range 50,000-55,000 units, close to the amount sold in 2018 at 52,000 units. This comprises 31,800 units launched in 2018 and 20,300 units launched in 2017 or earlier.

“Developers should focus on city condos and the mid-priced market as these segments have real demand with the largest homebuyer base,” she said.

“These segments are more stable and sustainable than foreign buyers or investment markets.”

City condos priced below 75,000 baht per square metre, or lower than 2.5 million baht a unit, have real demand, with the mid-priced segment falling to 75,000-110,000 baht per sq m, or 2.5-6 million baht per unit, according to Nexus.

She suggested developers also develop products for specific demands like a condo for workout lovers or pet lovers and senior-friendly condos.

According to the company’s market research, the number of new condo supply launched this year totalled 60,900 units from 138 projects, bringing the total supply to 610,900 units.

The largest amount of the new supply was in the Phaya Thai-Ratchadaphisek-Phahon Yothin area with 21,100 units that accounted for 35%, followed by Phra Khanong-Suan Luang with 13,500 units at 22% and Thon Buri-Petchkasem with 8,500 units, or 14%.

These three locations also saw the highest increase in new supply in the past five years with growth of 65-70% as they are located near mass transit lines and plots for new condo development were readily available.

Of the new supply, 41% were in high-end segment with units priced 110,000-190,000 baht per sq m or 4-8 million baht a unit, followed by middle-end market (27%) and city condo (21%).

She said a large number of the high-end supply newly launched this year was not in line with the incomes of people in Bangkok as land prices soared higher.

“In prime locations like Thong Lor, Phrom Phong and Ekamai, condo prices this year were as high as 400,000 baht per sq m and will see 500,000 baht next year,” she said.

“At this price, demand is very limited, and we wonder if there are buyers who can afford it.”

There are 62,700 units unsold in the market that will be carried over to next year. Due to negative factors like the new lending curbs and rises in interest rates, the market should monitor condo units being completed and transferred next year.

The average price per sq m of the new condo supply launched this year rose 7.6% to 140,600 baht from 130,600 baht last year.

The highest increase was in the inner city with a growth of 10% to 231,000 baht per sq m, followed by city fringe areas with a rise of 7% to 113,200 baht.

Mrs Nalinrat said projects from foreign joint ventures with Thai developers will continue growing to 30% of total new supply being launched next year, from 26% or 15,820 units at 24 projects this year.

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