Condo market looks to be set for revival

At a recent seminar held in Bangkok, the president of the Thai Condominium Association was quoted as saying the market had recovered significantly in June after a sluggish period between November 2013 and May 2014 which was highlighted by the political crisis.

The president said he expected the condo market would see very strong growth in the second half of this year. Even so, he warned that the overall market value of condos might drop by up to 30 percent to 140 billion baht, down from 190 billion baht in 2013.

According to the Real Estate Information Centre (REIC), the value of newly launched housing in the greater Bangkok area in the first half of this year totaled 135 billion baht, a 22 percent decline year-on-year. Condos represent 55 percent of the housing market and they had dropped by more than a third, whereas townhouses had declined nine percent and houses just four percent.

The chief marketing officer of AP (Thailand) stated the overall condo market had dropped in the first half of this year after growing at a substantial 30 to 40 percent annually over the previous two years.

Nonetheless, the occupancy rate remained very strong at 79.8 percent in the first quarter of this year. This was significantly above the rates in 2011, 2012 and 2013 which peaked at 78.6 percent in the latter year.

The managing director of LPN Development Plc, said condo demand and supply were related to consumer confidence. LPN said it had delayed new launches in the first half of this year, concentrating instead on ready-to-transfer units and under-construction projects in a desire to turn condo stock into cash.

The REIC director-general said he expected to see an upward trend in the overall housing market in the second half of this year as capital flows help boost purchasing power.

Condos in the greater Bangkok area account for 70 percent of the national market and indications are good that this segment of the marketplace is recovering well. The seminar noted that the condo sales rate in the first quarter of this year for the greater Bangkok area stood at just 38 percent, but this had risen significantly to 52 percent in the second quarter and expectations are high that the numbers will be even better into the third and fourth quarters of 2014.

Although the condo market in the provinces was quite sluggish with an apparent over supply after recent years of growth, both Phuket and Chonburi provinces are generally unaffected.