This is the year when condominium end-user buyers can smile; with many developers saying that they will concentrate on clearing their completed but unsold condominium inventory in response to weaker demand, partly due to the Bank of Thailand’s stricter mortgage requirement policy for 2nd and 3rd homebuyers.
The residential market this year will be more driven by end-user demand, with fewer investors or speculators compared to recent years.
Many developers said they will focus more on low-rise residential new launches with single detached houses and townhouses, rather than condominiums this year. The low-rise residential market is entirely driven by Thai end-users, not buy-to-rent investors, foreigners or speculators.
CBRE expects to see a significant increase in new low-rise housing projects, raising the level of competition in this segment.
The condominium market is going to be slower this year. Condominium developers, instead of planning many new launches, will concentrate more on unloading their built-but-unsold condominium inventory, completing buildings, transferring titles to existing purchasers, and selling remaining units that are under construction.
CBRE believes the condominium market is going to be driven mainly by the end-users; people who buy units to live in themselves. There will be a lower level of speculative buying of off-plan condominium units to resell before construction completion.
Buy-to-rent investors will be more selective because the number of expatriates, which is the main source of demand for the central business district (CBD) rental market, did not increase, nor did the expatriates’ rental budgets.
The reason that end-user purchasers should be cheerful is that many developers are going to offer impactful incentives to purchase, including some significant discounts and aggressive promotional campaigns.
Purchasers will be able to see a range of completed projects in their preferred locations and compare completed products, rather than rely on the brochures and show units of under construction developments. They can see exactly what they will get, making the comparisons much easier.
The discounts will mainly only be available in buildings with unsold inventory; and CBRE does not expect a fall in prices across the whole market. In fact, the opposite is the case with prices still rising in the most sought after, prime, CBD condominium developments.
Overall, the market cooling measures will be positive in the longer term, preventing the buildup of an excessive bubble and allowing real demand to take over from speculative demand.
There will still be new off-plan launches at every level of the market, but the developers will be more cautious and increasingly focus on domestic end-user purchasers in the entry and mid-level market. This means they will have to provide a product that people want; in terms of size, design, and specification; in their preferred locations at a price they can afford.
Source: CBRE Thailand