Publicly-listed Thai condominium developer, Raimon Land PLC recently released their latest condominium research – Condominium Focus Thailand. Focusing primarily on Bangkok and Pattaya, there is no research on resorts markets such as Phuket as there has been in the past, presumably due to Raimon Land´s The Heights Phuket condominium development having been finished.
According to the report:
Thailand´s property sector is showing signs of an early recover, as selective investors return to purchasing real estate stocks and actual property.
The condominium market appears to be recovering, as all major developers reported stronger Q1/09 presales after a dismal Q4/08.
Developers are also enjoying lower construction and material costs alongside a selection of reasonable priced, quality land plots in 2009, but banks remain cautious in releasing new loans for condominium projects.
Condominium development indicators for Q1/09 reveal:
- Presales more than doubled those in Q4/08, signaling the market has already bottomed out.
- Construction costs by gross floor area (GFA) have fallen more than 10% since Q3/08.
- However, the drawdown on new loans tumbled 36.5% to THB1.8 billion from last year´s THB2.9 billion.
A drastic reduction in the condominium launches is taking much of the blame for slumping presales, and cancellations and returns led to negative presales in Q4/08. However, more projects launched in early 2009 are reporting good presales.
Despite the poor market sector performance in 2009, the report notes signs in 2009 remain positive where “Off-plan take is still high at 73%.”
With regards to new supply in the Bangkok market, the report goes on to say:
The latest inner-city Bangkok transfer figures shows:
- The gap between completed and transferred condominiums has widened after a shakeout of unqualified buyers.
- Recent high-end completions drove the average price/sqm. of transferred units to a new high.
- Sukhumvit led the want in transfers, followed by Silom/Sathron, and high-priced Central Lumpini.
Earlier this week Raimon Land reported an increase in IFA´s shareholding in the company, followed by the release of Q2 figures showing a loss of over THB200 million in 2009. This on the back of positive profit postings by many of Thailand´s publicly-listed real estate companies over the same period.
With regards to Pattaya, the report notes mixed results, with completed and resales of completed units showing some positives:
Much like tourist arrivals, condominium launches cooled in 2009 after a record H2/08, while the take-up rate sank to 35.2%, a low not seen in four years. With the gap between supply and demand widening, the average unit price began slipping from its H1/08 peak to below the THB100,000/sqm mark in 2009.
It is fair to say we see more glossy sales brochures and property billboards than actual cranes in Pattaya, and the lack of finished supply continues to guarantee strong annual returns in the range of 5-7%. While resale prices in finished properties are escalating to be more in line with current off-plan prices.
This trend is set to continue, with only a third of the total launches expected to be completed in the next two years, while the remaining units are scheduled to come be transferred to buyers in 2012 and 2013 onward, though it is unlikely that all developers will meet their targeted completion dates.
This is the 8th edition of the Condominium Focus Thailand, published by Raimon Land.
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