Developers brace for slower sales in second half of year
The property market in Bangkok and its suburbs is expected to drop by 15.9 per cent in the second half of this year compared with the first half as the drop in purchasing power is forcing most property firms to delay the launches of new residential projec
"We are seeing the market drop in the third quarter of this year compared with the second and first quarters as demand for residential property has been absorbed in the first half of the year, especially the demand for luxury residences that have shown strong growth since the first half of this year," Thai Condominium Association president Prasert Taedullayasatit, who is also managing director of Pruksa Real Estate Plc, told The Nation this week.
He said that in the first half of this year, total sales value of residential projects in Bangkok and its suburbs amounted to Bt179.3 billion, up 31 per cent from the same period of last year. Up to 70 per cent of the total was from condominium projects, especially luxury condos. With condo projects worth up to Bt100 billion launched in the first half of the year, new condo project launches in the second half year will be lower, he said.
The association estimates total property market value in Bangkok and its suburbs – single detached houses, townhouses, and condos – to be Bt330 billion. In the first half of the year, sales worth Bt179.3 billion were recorded, which means in the second half, sales will be down to Bt150.7 billion, a drop of 15.9 per cent half on half.
However, the overall property market in Bangkok and its suburbs this year will grow to 13 per cent when compared with last year thanks to strong demand in the first half of this year that boosted the market, he said.
The Bank of Thailand reported that the property market, in the first seven months of this year, saw slight growth in keeping with the country’s economic situation.
"In 2012-13, most of the new residential projects were sold out in less than one year after launch, but now new residential projects take more than a year and half to be sold out," BOT senior director of macroeconomic and monetary policy department Roong Mallikamas said earlier.
Delay in launch of new projects
Following the drop in purchasing power, most property firms are delaying the launches of new residential projects in the second half of this year.
Pruksa Real Estate has revised its plan to launch up to 12 new condominium projects worth Bt15 billion. Instead, only four projects worth Bt7 billion will be launched; two of them in the first half of this year, worth Bt4.56 billion, and the other two in the last quarter of the year, Prasert said.
Sansiri Plc has also revised its business plan to launch on its own new condominium projects in the second half. Instead, it is focusing on five new condominium projects worth Bt20 billion as a joint venture with BTS Group Holdings Plc, company CEO Apichart Chutrakul said earlier.
Quality Houses Plc has revised its plan to launch 30 new residential projects. It will launch 26 projects while four projects will be delayed until next year, as a result of the drop in purchasing power, the company’s CEO Chadchart Sittipunt said earlier.
Time to buy
However, this is the best time to buy residences as some units may come up for resale when its owners face cash crunch if commercial banks reject their mortgage applications, said Prasert, who is also president of the Thai Condominium Association.
He said that up to Bt130 billion worth of condo units would be transferred to customers in the last quarter of this year. About 10 to 20 per cent of applicants have been rejected for mortgages by commercial banks. As a result, property firms have to resell them to the market. This is the best time to buy condominiums, as the price will be lower than for new condo projects launched this year, especially those whose construction began in 2013.
"Resale condos will offer a price lower than for new condominiums by between 10 and 15 per cent normally," he said.
Meanwhile, most property firms are offering special promotions to sell their residential projects – single detached houses, townhouses, and condominium projects – to boost their sales in the last quarter of this year after sales in the third quarter fell short of estimates.
For example, Proud Real Estate Co Ltd launched its marketing campaign "Believe In Thailand", by offering investors who hold shares of companies that are a part of SET50 to use their stock holding as down payment to buy in its condominium project Park 24.
The company will use the share-price valuation when the SET Index was 1,615 as down payment.
AP (Thailand) Plc has launched its latest marketing campaign, "It’s Your Move", by offering a discount of up to Bt500,000 for its 17 townhome projects under the brand Baan Klang Muang, which offers a price between Bt3.49 million per unit and Bt7.99 million per unit. The campaign starts now till September 30.
Noble Development Plc launched its "Twin Peaks" campaign last week by offering discounts of up to Bt1.9 million to those who buy in its Noble Ploenchit project, which offers a starting price of Bt11 million per unit, and Noble B33, which offers a starting price of Bt7.4 million per unit.
SC Asset Corporation Plc is offering discounts of up to Bt1 million for its condo project Centric Sathorn-St Louis for two- and three-bedroom types, which offered a starting price of Bt8.5 million per unit last week.
Meanwhile, most property firms will also offer special promotion campaigns at the 33rd Home and Condo Expo from October 8-11 at Queen Sirikit National Convention Center.
