Twofold property tale emerging along Skytrain
WITH proximity to the Skytrain system now strongly resonating in the real estate industry, a twofold story is evolving with one being that good existing residential buildings are doing well but at the same time new supply from mid-upper developers continue to flood the market, Robert Collins, CEO of Savills Thailand said this morning.
Existing condominiums in prime parts of Sukhumvit and Silom-Saladaeng but also close to the Skytrain that are really doing well include Saladaeng Residences and Royal Saladaeng with the latter being completely full.
Yet it is disturbing that mid-upper development groups continue to introduce new condominium projects with anything from 200 to 800 units despite there not being adequate end-user demand to satisfy this level of continued new supply.
“And it’s getting to the point where it is not necessarily a bubble or chronic oversupply situation but they are really just looking to cause harm to themselves if they persevere with pumping the market full of new supplies – economic dynamics don’t factor into their business model.
“But buyers make their own decisions and at the end of the day its buildings which have good property management that are well located which continue to prosper really well.”
Mr Collins pointed out that except for the very premium, absolute upper end which strangely is undersupplied, all sectors are now oversupplied including the budget level where too great a volume of new supply is coming on line.
“It’s as if there is a suspension of reality that has taken place among many of these mid- to upper-mid developers.
“They are just not doing their research, they are not seeking opinions from enough experts in the marketplace … you know they need to take a step back and take stock, seek advice from more qualified parties.”
However Savills’ boss is more optimistic about the mid-lower end because this is more of a mass market and population growth would lead to these units being absorbed. Yet while there is always room for real people in this segment, there is none for speculators.
“I think well-considered new large-scale development at the mid-lower sector is quite prudent and good for everyone.
“Perhaps there should be more assistance from the government, more encouragement for the developers, a greater level of low-rise, green living, good parking – the middle class they all drive so they need to park their car, accessibility to the city – it doesn’t have to be direct BTS accessibility but they need good road transport.
“There needs to be incentives to open up, to encourage.”
By Nina Suebsukcharoen
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