Bangkok’s condominium market has been severely curtailed as a result of lingering doubts about the government’s incentive policy for first home buyers, according to Colliers International Thailand.
In its latest research report, Colliers noted that approximately 3,000 units were launched during Q3 2011 compared to the 11,600 units which were launched in Q2 2011.
Current incentives favour properties already under construction and that can be completed before the end of 2012 – an extremely challenging timeframe for any newly launched condominium.
The main beneficiaries are middle- and high-income earners, and some feel the government may make further additions to the scheme that could favour new condominium launches.
According to Tony Picon, Associate Director of Research at Colliers, a wait-and-see attitude has been adopted.
"Buyers are waiting for the full picture to emerge before stepping in, and developers are taking note and delaying launches," he said.
According to the report, 4,000 new condominium units were completed and registered in Q3 2011 with the total number for the whole of Bangkok being approximately 315,100 units.
According to Surachet Kongcheep, Senior Manager for Research, more than 25,700 units are scheduled to be completed in the last quarter of 2011. Even though launches were down, future pent up demand is predicted by developers.
"We have seen a significant increase in high-rise construction permits being lodged prior to launching, which suggests developers are getting ready for a surge in new launches once everybody is clear regarding the incentive programme", said Mr Kongcheep.
Patima Jeerapaet, Managing Director of Colliers, believes the various actions of governments over the course of the year have had a detrimental effect on the condominium market.
"First there were cooling measures adopted at the beginning of the year as a precaution against a supply bubble forming, and now incentives aimed at stimulating the market are having a contrary short term effect".
Despite this, Mr. Patima remained bullish about long term prospects. He said, "The market will bounce back with vengeance as demand for units is real and developers are just deferring.”
New launches for Q3 2011 were down some 74 percent compared with the previous quarter. Approximately 3,000 units were launched in Q3 compared to around 11,600 in Q2 2011. This was the lowest number recorded during the past three years.
Approximately 25,700 units are scheduled to be completed during the rest of 2011. The Northern Fringe area continues to be the main player in urban Bangkok, with nearly 6,700 units scheduled to be completed within 2011, followed by the City area with around 5,190 units.
It is expected that the Northern Fringe will continue to dominate supply for the early part of the decade in urban Bangkok.
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