Property market expected to shake off the blues after February

THAILAND’S economic growth rate for the year of the chicken is forecast by many to be in the region of 3.5%, which is not bad at all but what about the property market?

In 2016, property developers faced a relatively tough year due to a number of factors that included the government sponsored property tax incentives at the beginning of the year and the pushing forward of project launches from the back end of last year to this year.

Colliers International estimates that 40,000 new condominium units in Bangkok were launched last year and around 13,000 units for new housing projects. The supply of units in the condominium market decreased in the final quarter for 2016 as a result of the overall slowdown of the market in Bangkok.

rscb-bangkok-viewnewMany developers halted their sales and marketing activities during this time of national mourning for His Majesty the late King.

Some real estate agencies say the market looks positive for 2017 and Sukhumvit is predicted to continue its reign as the most popular destination in Bangkok for new developments.

Developers are anticipated to resume launches this year with focus being on the areas dotted along the future mass transit networks such as the Pink, Yellow and Orange lines that are due to start construction this year.

Despite optimism in the property sector, securities firms remain cautious.

KGI Securities (Thailand) Public Company Limited rated the property sector in 2017 only “neutral.”

KGI quoted Agency for Real Estate Affairs (AREA) reporting residential data for November last year that new launch housing supply and demand plunged sharply as sentiment started deteriorating after October. However, the data showed overall take-up rate in November managed to stay at the same level as the previous month at 33.8%. Most residential developers delayed new launches from 4Q16 to the first half of 2017, so overall activity looks slack in the near term.

However, KGI believed market activity should return to normal conditions sometime after Thailand’s 100 days of mourning and Chinese New Year.

New residential supply for November plunged 46% month-on-month from 15,398 to 8,339 units as developers remained cautious over the economic outlook and market sentiment. New supply for 11 month last year declined 2.5% compare to the same period in 2015. On the demand side, residential demand also plunged around 46% month-on-month from 5,197 to 2,882 units, therefore, the take-up rate managed to hold at the same level as the previous month at 33.8%.

New housing supply growth dropped 2.5% in line with our estimate of pretty flat new launch growth for 2016. Meanwhile, new residential sales improved around 9% pushing monthly take-up rate from 21.1% in January to 33.8% in November (11M16 take-up rate stays at 30.2%).

KGI foresees ongoing deteriorating sentiment only being a short-term interruption and activity in the housing market should gradually resume recovering after February 2017. It expects new supply growth of around 5% while residential sales are likely to continue improving at roughly 10% and this should boost 2017 take-up rate to 35% from around 30% at the end of 2016.

Therefore KGI maintains a “neutral” rating on the property sector as the housing market recovery has been uneven and the outlook for major residential developers appears divided. Ananda Development and AP remain its top-picks and are rated outperform for the year.


Top: A bird’s eye view of downtown Bangkok with lots of high-rises standing cheek-by-jowl. Photo:

Inset: Some high-rises standing close to Royal  Bangkok Sports  Club. Photo:

By Kowit Sanandang


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