Developers zero in on mid-market
MANY listed developers are aggressively planning to launch a number of residential projects in Bangkok during this year’s second half with most targeting the middle-income market, Knight Frank Thailand said yesterday.
Although these developers realize that the market is very competitive, they believe that there are non-registered migrants in the city looking to buy or rent a condominium. Investing in property is also more attractive than obtaining low interest rates from banks or taking chances in a volatile stock market.
“Most developers are now targeting middle-income folk who are earning between 50,000 to 100,000 baht per month because this segment has sufficient purchasing power to buy.
“They also find it easier to get bank’s approval for a mortgage than those in the lower income market.
“Demand should improve from the first half due to better economic conditions. The selling price is estimated to climb, especially in the CBD area.” Potjaman Vorakitpokathorn, Knight Frank Thailand’s director for project marketing said.
While condominium supply continued to rise in the first half of the year despite weaker economic growth and rising household debt, as much as 75% of new launches was in the peripheral areas of the city because of land scarcity and high price in central business district and city fringe areas. Of the remainder, 15% was in the city fringe area and 10% in CBD.
The highest concentration of new peripheral supply was in the northern part of Bangkok, along late Paholyothin, Rattanathibet and Chaengwattana areas, with this accounting for 41% of the total new peripheral supply.
“Oversupply should be in the peripheral area of Bangkok, especially in the northern part along the Tiwanon and Rattanathibet areas, with about 53,220 units available for sale,” Risinee Sarikaputra, Knight Frank Thailand’s director for research and consultancy said.
However the main focus of listed developers during this period was to transfer and clear completed units to buyers and they mounted various campaigns to meet this objective.
Even so, at the lower end of the market where units are priced below 1.5 million baht, up to 35% of the buyers failed to secure loans from the banks.
The Bangkok condominium supply at the end of Q2 2016 amounted to 406,305 units, increasing by 5.8% from the end of 2015. There were approximately 22,152 units added during the first six months of 2016, a drop of 35% from the same period last year. Approximately 34,439 new units were launched during the first half of 2015.
There were three large projects launched during the first half of the year: The Politan Rive (2,359 units), Lumpini Ville Ratchaphruek- Bangwaek (1,085 units) and Lumpini Park Petchkasem 98 (1,355 units). All three projects are located in the peripheral area of Bangkok, with a selling price in the range of 45,000 to 55,000 baht per square meter.
Overall, the take-up rate has increased from 78.8% at the end of 2015 to 80.4% during the first half of this year. However the sold rate increased because of the slowing down of new launches which means the units sold during the first half of 2016 dropped by 4%. This was due to the weakening purchasing power of buyers and stringent loan standards by banks.
As of the middle of this year, sold condominiums totaled approximately 326,871 units out of 406,325 units. There were approximately 79,434 units available for sale, of which around 67% were located in the peripheral area of Bangkok. CAPTION:
TOP: Lake Ratchada skyline showing some prominent Sukhumvit buildings. Photo: Mark Fischer (CC BY-SA- 2.0)
By Thai Residents reporters