Bangkok has 100,000 empty flats and coronavirus will make oversupply even worse
- Chinese buyers previously accounted for much of the foreign investment but that has been affected by the travel curbs and economic havoc
- Even before the outbreak of the coronavirus, foreign interest flagged as the Thai economy, reliant on trade and tourism, slowed down
“The demand from foreigners may disappear in the first half following the outbreak,” said Sopon Pornchokchai, the consultancy’s president, adding that there are 100,000 vacant condominiums in and around Bangkok. “We’ll need to rely on local buyers, but that won’t be easy.”
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The Bank of Thailand has relaxed mortgage-lending rules to encourage domestic purchasers but developers remain wary. For instance, Naporn Sunthornchitcharoen, the chief executive of major Thai developer Land & Houses, last month said the firm was “afraid” of the condominium segment.
Even before the coronavirus spread from China, foreign interest was flagging as the outlook for an economy reliant on trade and tourism deteriorated amid currency strength in 2019 and the US-China trade war.
Land & Houses doesn’t plan to open any new condominium projects this year. Another developer, Singha Estate, is “very cautious” about buying land for residential offerings because of concerns about an oversupply of property in certain locations, Head of Investor Relations Maysenee Ratnavijarn said.
The real estate sector slowdown is among the many challenges ahead for the Thai economy in 2020. Gross domestic product growth may slow to as little as 1.5 per cent this year, a six-year low, a government agency forecast last week.
Thailand’s 55-member Property Development Index has tumbled about 19 per cent in the past 12 months, worse than the 9 per cent slide in the overall Thai stock market.
Developers are expected to bring about 6,000 new condominium units to the market in Bangkok in the first quarter of 2020, down 40 per cent from a year earlier, according to Phattarachai Taweewong, associate director of Colliers International Group’s Thai unit.
“It’s tough situation in 2020,” Phattarachai said. “Hopefully the market can go back to balanced supply and demand again in the next three years.”
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Foreigners are allowed to own 49 per cent of units in any condominium project in Thailand but are not allowed to own land.
Surachet Kongcheep, an analyst at Bangkok-based Phoenix Property Development and Consultancy, last year told the South China Morning Post: “The prices of property in Thailand are not too expensive and Chinese mostly spend on units that are valued below 3 million baht (US$95,000) as a form of investment.”
