Oversupply fears set to slow Bangkok’s property market

Oversupply fears will slow the Thai property market for a couple of months before positive sentiment will resume next year, according to local developers.
Mayta Chanchamcharat, Director and Chief Business Officer of Pruksa Real Estate said concerns about a possible property bubble in Bangkok and the Bank of Thailand’s announcement capping condominium mortgages at 90 per cent of value from January 1 have quietened the market due to a retreat of speculators and investors.
He said: “Due to the market concerns of some areas being flooded by oversupply and the property bubble, the market now doesn’t seem to absorb the existing supply of residential units as fast as before”.
As reported in the Bangkok Post newspaper, the take-up rate of newly launched condominiums dropped to 45-50 per cent this year from 70-90 per cent in previous years.
However, Mayta believed that the central bank’s measure should not have a negative impact on the property market. The curb would also be beneficial for the industry as a whole as it will allow the market to adjust in terms of demand and supply.
On the other hand, Pruksa’s Executive Vice President Wirote Kappiyajanya was confident that improving economic factors would soon bring back positive sentiment. He said: “Many developers may be delaying their project launches for the moment to keep an eye on whether the situation will become as many have feared. But the impact will only linger for three to six months before giant developers resume their project expansion again.”
Visit Malaisirirat, Managing Director of Magnolia Quality Development Corporation, also saw positive signs in the market as he believed that demand in the mid-to-upper-end segment would continue to grow next year.
The company plans to launch five residential projects next year including two condominium developments in Bangkok and a hotel in Khao Yai.
It expects to generate THB900 million (US$29.96 million) in sales by the end of this year.