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Demand slows for Condos in Thailand according to Fitch

By on Nov 27, 2013 in Property News

Residential developers in Thailand face the prospect of slowing growth as the expected weakening in consumer purchasing power is likely to suppress housing demand, according to Fitch Ratings.  Banks have tightened up on lending to individuals, as household debt had soared to almost 80 per cent of gross domestic product as of the end of June. This could raise the mortgage rejection rate and delay the purchasing decisions of new customers.

Launches in the first nine months rose 28.5 per cent by units and 36.2 per cent in value from the same period last year, according to the Agency for Real Estate Affairs.

Most of the new projects are condominiums, and many are likely to be completed this year. This would take this year’s condo completions to a record level, according to CBRE Research Thailand, Colliers International Thailand and some large developers.

However, there may be some construction delays due to the chronic labour shortage.

In Fitch’s view, the impact on large listed developers with strong brands and well-diversified product portfolios should be limited, given their ability to adjust their product mix to maintain their take-up rates. With continued urbanisation and economic growth, this risk of widespread oversupply should not be imminent. A glut may surface only in some locations, especially in areas where developers are targeting lower-middle to low-income home-buyers.

However, the competition among large developers is likely to intensify and may put pressure on prices and margins.

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