Some condo developers are facing minor headwinds including stricter mortgage rules and higher build prices, which has affected affordability for prospective buyers.
Selling finished units is certainly an important facet to any developer’s business model since a completed unit has had the maximum amount of money invested in it and will, by the same measure, have an adverse affect on cash flow until it is sold.
Condo developers can also find themselves at a disadvantage to those building houses. A housing project does not have to be completed in its entirety in order to sell units and have people move in. Completed houses can be sold whilst other plots can still have construction of new homes ongoing.
Yet with a condo, the building has to be completed for people to be able to move in, and if not all the units are sold off-plan then completed units can appear on the market. Not only that, condo developers typically have a lot more condos to sell in a single building than a housing developer will have single detached houses to sell in a project.
Other factors are also at play. A house can be built in a few months, even weeks, and be ready to sell, whilst a condo building typically takes 2 to 3 years to complete. As such, condo developers have to plan ahead very carefully, often without all the facts to hand. For example, they will need to guess where the future hotspots will be, what kind of competition will be announced after they have broken ground, and how the overall economic backdrop will be in several year’s time.
It is not surprising then that some developers are putting together special deals for completed condo units in order to convert them to cash and help their cash flow.
The areas where most of this activity is occurring is in highly competitive places where take up rates can be less than ninety per cent and some times as low as eighty per cent.
Sukhumvit road from Soi 1 down to Soi 121 has a fairly large number of unsold completed units. Yet in Sukhumvit road, even after negotiating a discount, prices can still be high, often over 200,000 baht per square meter.
A few other up and coming areas may be worth a look at as prices are lower, but they could become future hotspots. Completed condos in the area around Charan Sanitwong and Phetkasem roads along the Blue mass transit line can be found for 2 to 3 million baht per unit.
Similarly the Purple line along Krungthep-Nonthaburi Road, has along it unsold units that are less expensive. Some projects broke ground in 2015 and are still trying to sell completed units in a market where supply has grown.
Vibhavadi Rangsit and Phahon Yothin roads and the end of Ladprao Road between Sois 1 to 28have many completed condos, which can be found for less than 3 million baht.
There is also an easy connection to the city by MRT.
As well as providing apotential discount, completed units can also provide you with peace of mind as to exactly what you are buying, compared to an off-plan purchase.