The Bangkok residential market continued to expand in the first half of 2018, with new condominium launches totalling 21,500 units, similar to the same period last year.
Most developers are now concentrating on new skytrain lines under construction or areas where mass-transit construction is expected to start in the next year.
Some are still looking for promising plots along existing BTS and MRT lines but land prices are becoming a big barrier. However, some new condo developments are being seen in very pricey areas such as Lang Suan, Thong Lor and Ratchathewi.
While some developers have postponed their original plans to launch new condominium projects in the first half of this year, overall there are more projects in the pipeline by listed developers than there were a year ago.
At the same time, however, almost all developers are focusing more on detached housing, as shorter construction times mean faster revenue realisations.
Demand in the condominium market is not as stable as for single houses, and many unsold condo units remain in the market. The overhang is putting pressure in selling prices, and developers are finding it difficult to justify increasing prices for new projects even if their costs have risen.
Even though the number of detached housing units has declined each year for the past three years, developers are still looking for good land plots as they believe demand will remain steady. They are looking in areas along under-construction mass-transit lines with an eye to developing housing estates with 200 to 300 units, or fewer than 200 in some cases.
Some developers, meanwhile, prefer to launch big housing projects in the provinces around Bangkok where land is cheaper. Land prices in the capital have reached the point where developers need a selling price of 5 million baht per unit to get a return.
In the second half of 2018, expect to see residential property developers speed up launches in the hope of realising more revenues and meeting yearly targets.
The most interesting areas will be Thong Lor, Ekamai, Phaya Thai and Ratchathewi, as well as areas along under-construction mass-transit lines, notably the northern (Mo Chit-Ku Kot) and southern Green Line (Bearing-Samut Prakan), and the Yellow Line (Lat Phrao-Samrong).
But the main concern for all developers will be the economic overview, as confidence in a future upturn will have a direct bearing on purchasing power.
All developers will be launching more condo units with selling prices between 80,000 to 120,000 baht per square metre, but units priced above 200,000 baht per sq m are still expected to find buyers, as will detached houses priced above 20 million.
Chinese buyers will continue to be the main foreign purchasers in the Thai condominium market, and developers have been courting them quietly. The main locations that interest them are along the existing skytrain and subway lines such as Sukhumvit, Rama IX and Ratchadaphisek.
In addition, some tourist destinations are seeing Chinese buyers but the total is still lower than in Bangkok.
Surachet Kongcheep is a veteran local property market expert. He can be reached at surachet.jock@gmail.com