Concerns about an overheating condominium market were allayed in the first quarter of 2011, with a fall of around 46% of new launches when compared to the previous quarter, according to the property services company Colliers International Thailand.
It reported approximately 10,800 units were launched in the first three months of this year. The six months prior to the first quarter were a frenetic time for the condominium market, said Antony Picon, the company’s associate director for research.
He believes this represented an aberration rather than a trend.
”Many of the launches were tapping into the first-time buyer market with small unit sizes and affordable prices and the reaction was similar to any new high-profile product hitting the market for the first time, such as the iPad,” he said. ”After a while things steadied and become more sustainable and that is what we are seeing now.”
Managing director Patima Jeerapaet said the Bank of Thailand’s new loan- to-value curbs on mortgage lending and the steady rise in interest rates went a long way to restrain the breakneck pace of launches.
”There was considerable media attention at the end of last year regarding the high number of launches and prudent action has been taken that allows the market to consolidate rather than come to a complete halt and this can only be good for the market in the long term,” Mr Patima said.
Increasing land prices and construction costs are creating pricing pressures and it will be difficult for developers to pass these on to buyers. Unit sizes can only be reduced by so much and already there is talk of action to limit this so any future price rises will only be possible with strong economic growth translating into higher wages.
New launches for the first quarter were down by 46% compared with the previous quarter. Just under 10,800 units were launched in the first quarter compared to around 20,000 in the fourth quarter of 2010.
In the first quarter, the suburban area trumped urban Bangkok with the higher number of units launched. Many projects in the suburban Bangkok area contained over 600 units.
Within urban Bangkok, the northern and southern fringe areas showed the highest number with approximately 1,600 units or 15% each of the total.
About 3,500 new condominium units were completed and registered at the Department of Land in the first quarter and the total number of the whole of Bangkok was approximately 300,000 units, and more than 39,500 units were scheduled to be completed in 2011.
The number of units under construction and scheduled to be completed in 2011 was the highest since the financial crisis in 1997.