Budget condo market in worse shape

AS employees’ income has dwindled over the past year because many companies no longer pay overtime this has directly impacted the budget condominium market with the bank rejection rate also now quite high, Jiraporn Linmaneechote, a research analyst at Phatra Securities said at Kiatnakin Bank’s annual seminar today.

The oversupply at the low end is as much as 60% of total sales excluding units that have still to be launched.

“I have to say that every developer has stocks which they have to sell to get revenue – clear this stock.

“Last year it was not the same, what was built had already been sold with only transfers pending.

“The difference this year is that after you finish the whole building there might be 40 to 50% which no one has bought –so you have to both sell and push transfers.”

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Phatra Securities analyst Jiraporn Linmaneechote, left, and Kaitnakin Bank’s research head Dr Piyasak Manason at a press conference after this bank’s annual seminar at Swissôtel Le Concorde.

Developers weighed down by stocks at the lower level are trying to jump into the mid- to high-end market because they think there is still demand there although it is in fact not performing spectacularly.

“Mid-level projects can move in good locations, but if the supply jumps substantially not every project will be successful.”

There is also a cause for concern at the super-luxury level because while this segment has a captive demand this is not very large and when a new project is launched there are a lot of units to sell.

“Although this group has the ability to pay we have to see how much is left to be sold. Actually good units in good locations are easy to sell but if the location is not really prime, then it is exhausting.”

While foreigners are buying condominiums here, Ms Jiraporn has noticed a change from 2008-2009 when they bought big units and if they ventured to the resort towns opted for houses because now they seem to be interested in Onnut-Sukhumvit area of the city.

Phatra Securities research shows that last year property sales growth was around 14% but new launches dropped by 5%. However this year new launches should jump by 13% but sales would increase by 10%.

Of the 13% increase in new launches this year, totaling 122,000 units, 60% would be condominiums and 40% low-rise. Of this year’s 10% sales growth, or around 112,000 units, condominiums would total 55% and low-rise 45%.

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