In the third quarter of 2017, the Bangkok, Thailand residential real estate market slumped slightly, depending on location. Although there were plenty of new projects being created, particularly condominiums, the number of buyers who can afford to buy property in them has shrunk. This doesn’t spell disaster, however, as things are looking up heading into the New Year. Overall, the real estate market in the main parts of Bangkok went up, thanks to plenty of demand, while the suburban areas have suffered.
New Projects on the Horizon
In the third quarter of 2017, over 4,000 new condominium units appeared on the market. These units are in the downtown Bangkok area. Many of the ones yet to be constructed – a whopping 30,480 are still underway – have been claimed. According to projections, 77% of them are already sold or under contract. This means that 23,000 of them are no longer on the market and will be moved into once they have completed. Only around 7,000 remain on the market, and they might be snapped up before work on them is done.
Of the new units that were finished in the third part of 2017, the 4,000 mentioned above, most of them have found owners. This doesn’t factor in the new projects on the horizon, including several condo developments that will be leased for a 30-year term once they are finished. These new developments have asking prices of between $300,000 and $330,000 THB per square meter. That is considerably more than in recent years, but the demand is still high, and people are willing to pay to live in these luxurious new accommodations.
Where Sales Are Weak
Unfortunately, things in the suburban area of Bangkok haven’t gone so well. The market here is weak, due to a number of factors. In the suburbs, people do not have the same money, as far as salaries are concerned, compared to those in the city. When this is compared to a glut of unsold housing inventory, high land prices, and banks unwilling to lend to people who do not meet their financial requirements, many properties have gone unsold. This sets the tone going into the New Year, when things may eventually perk up. If they don’t, then prices will drop, and the developers may lose money. Things may still turn around, however, as the market in these areas adjusts. The laws of supply and demand will take over.
Disposable Income in the Bangkok Area
Some of the reasons for this discrepancy between the urban and suburban residential, retail markets in Bangkok is because of disposable income. Salaries in the city are higher, or the people living there can afford higher real estate prices. In the suburbs, the opposite has occurred. People make slightly less, have less disposable income and more debt, and are either unwilling or unable to pay the housing prices offered. Thankfully, some developers came up with an idea to help the suburban housing market recover.
Selling to Overseas Buyers
When it comes to the suburban – and even the urban – residential markets, some developers have begun marketing their units to overseas buyers. These buyers are either looking for a second home to stay at while vacationing in Bangkok, travel there frequently for work and don’t want to stay in hotels, or simply want to invest in real estate. Many of these foreign buyers are from Japan, although others are from all over the world. This is a good way to help the developers recoup costs, especially in the tough to sell suburban Bangkok market.
Which Housing Styles Are in Demand
Of all of the housing styles in Bangkok, the ones with two to three bedrooms are the most popular. Many of the new developments are either apartments or apartment-style condominiums, meaning that consist of a small segment of a much larger structure. Although some are made with fewer bedrooms, the ones with multiples are in demand, showing that most buyers either have families and need the space, or are planning on having a family at some point in the future. The condominiums available in Bangkok tend to be on 30-year leases, which work kind of like a mortgage, except for the fact that at some point the ownership is transferred back to the overall condo corporation. The apartments, again, most of which have between two and three bedrooms, operate on one-year leases, allowing the residents a chance to see how much they like the building before making a more permanent decision.
Overall, the residential real estate market in Bangkok is in good shape. Sure, some areas have too many unsold properties, but in the downtown and urban areas, there are plenty of buyers willing to pay high real estate prices. Since developers have reached out to overseas buyers, look to see the suburban market recover in no time.
Author Bio : This guest post is a work of John Parker in support of Phuket real estate agents.