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New Condo Development Focus at Small 1 B/R Unit

By on Dec 20, 2010 in Research, Residential

Bangkok Residential Sales MarketView Q3 2010

The Bangkok condominium sector is clearly split into two areas that are at different stages of their cycles. The market for larger downtown units has been slow with few new project launches and the clearing of constructed-but-unsold inventory by developers using discounts and promotions.

The focus for new development has been small one-bedroom units generally sized between 35-40 metresand priced at 2-3 million THB. The third quarter saw a significant increase in the launches of this type of project both in downtown and midtown locations.

The Bank of Thailand, concerned about the rate of new launches and the level of speculative and buy-to-rent purchasers, intervened with its announcement on 12th November that banks should not use a loan-to-value ratio of more than 90% for condominiums priced at less than ten million THB effective from 1st January 2011 and that loan-to-value ratios should not be higher than 95% for houses and townhouses effective as at 1st January 2012.

This was a very mild measure aimed, we believe, as a warning shot to developers, speculators and buy-to-rent investors because of concerns about the rapid growth in potential future supply.

In the sector for larger units there have been few new launches. Prices for recently completed good quality projects with a limited volume of remaining developers’ unsold inventory have risen slightly this quarter. At developments which have been completed and where developers or investors still have unsold inventory, prices have been discounted in some cases to levels that were originally offered at the launch date.

The average achieved re-sale price of units in completed upscale and above units increased by 12 % Y-O-Y.

In Q3 the average price for an off plan freehold condominium unit (high end and above) in downtown Bangkok was 158,261 an increase of 0.9 % Q-o-Q and 10.9 % Y-o-Y.

This is an extract from Bangkok Residential Sales MarketView Q3 2010, click to download the full report.

Toby has been living in Bangkok for a number of years and has a strong research background. With his years in Thailand Toby brings a wide range of property knowledge to his research writing

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