Developers see revival for condos

Thailand's condominium market is expected to recover in the second half, driven by improving consumer confidence, say developers.

"The market significantly recovered in June after a sluggish period from November 2013 to May 2014 when the political crisis was going on," Prasert Taedullayasatit, president of the Thai Condominium Association, told a seminar yesterday on the condo market.

In the second quarter, the condo sales rate in Greater Bangkok improved to 52% of new supply from only 38% in the first quarter.

The number of newly launched units rose by 10% quarter-on-quarter but dropped 11% year-on-year.

Mr Prasert predicted the condo market's value this year might drop 30% to 140 billion baht from 190 billion last year.

The housing market value is also expected to drop from around 350 billion baht last year, the industry's peak, to 270-280 billion.

According to the Real Estate Information Center (REIC), the value of housing supply newly launched in Greater Bangkok in the first half totalled 135 billion baht, down by 22% year-on-year.

Condos, which represented 55% of the housing market, decreased by 37%, followed by townhouses (-9%) and single houses (-4%).

Mr Prasert, also managing director of Pruksa Real Estate Plc, said the company's housing sales in June picked up to more than 4 billion baht from 2.2 billion and 3.3 billion in April and May, respectively.

Opas Sripayak, managing director of condo developer L.P.N. Development Plc, said condo demand and supply were related to consumer confidence.

"Amid unfavourable sentiment, condo developers should not cut their prices drastically, as buyers will wait for even lower prices," he said.

In the first half, L.P.N. delayed new launches and focused on ready-to-transfer units and under-construction projects, as it wanted to turn condo stock into cash as much as possible.

Vittakarn Chandavimol, chief marketing officer of AP (Thailand), said the overall condo market dropped in the first half after growing 30-40% annually over the past two years.

However, the occupancy rate remained strong at 79.8% in the first quarter compared with 72.4%, 77.4% and 78.6% in 2011, 2012 and 2013, respectively.

"The condo market remains healthy due to a change in people's behaviour and urbanisation trends," Mr Vittakarn said.

To attract buyers when the market comes back amid higher selling prices per square metre, developers should provide affordable packages, he said.

Atip Bijanonda, director of Supalai Plc, said condos in Greater Bangkok accounted for 70% of the national condo market.

The condo market in many provinces excluding Phuket and Chon Buri have slowed, as land prices have not increased so much that condos could replace low-rise houses.

"Condo supply upcountry takes time to absorb, as many units were launched just in recent years," Mr Atip said. "Even the low-rise segment is not that easy in provincial markets."

He said drivers of condo demand in provinces would be limited in the second half because the key driver of rice scheme payments had already passed.

REIC director-general Samma Kitsin said the second-half housing market would see an upward trend. "The property market will grow without any incentives as capital flow will help boost purchasing power," he said.

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