1.77 hundred thousand Pending residences will certainly stay still in year 2017

1.77 hundred thousand Pending residences will certainly stay still  in year 2017

Real Estate Market in 2017 in the period of the first half year has still been decelerated especially, in Bangkok Metropolitan Regions. Even though Total Market Value is about 1.98 Trillion Baht from the project value of about 3.3-3.5 Trillion Baht yearly. From purchasing power’s uncompleted recovery, challenging factors for entrepreneurs in the second half of the year such as labor, interest and household debts have brought in the forecast from different sections that Real Estate Market in the second half of the year will stay stable consistently.

1.77 hundred thousand Pending residences have increased by 8%

Kasikorn research center has predicted that residence market situation in the second half of year 2017 will be more stable after the end of the first half of the year. Besides, entrepreneurs are still waiting for the right moment of market’s recovery in order to invest residential project more carefully.

This is because the number of pending residences in Bangkok Metropolitan Regions at the end of year 2016 was at high level as well as the transfer of ownership located in Bangkok Metropolitan Regions.

The purchase from real estate development entrepreneurs in 2017 has also reduced when compared to year 2016 causing the longer time for residences pending. It is expected that the number of pending residences in Bangkok Metropolitan Regions at the end of year 2017 might be at 170,000-177,000 which will increase by 4-8% when compared to year 2016.

For residence investment and trading outside Bangkok, real estate development entrepreneurs are unable to increase the selling prices and  the release of pending condominiums located in the non-economic and non-tourism area may be delayed.

The second half of the year is the tough problem for real estate development entreprenures.

The increasing number of pending residences has caused the challanging problem in the second half of year 2017 of the release of pending residences.

Real estate development entrepreneurs should change the strategy by presenting the pending residences to different types of customers; group of newly workers, working class, family group, senior group or foreign group.  Residential projects can change the form to support the residences of people from different groups who tend to be highly flexible in adjustment for example, the project under construction, project with many units left etc.

Nevertheless real estate development entrepreneurs will be facing different aspects of challenges in new residential project development in the future for example, the challenge about labor, the high number of pending residences in some areas, high household debts, increasing interest etc. At the same time, entrepreneurs have to close the selling sooner to maintain business liquidity.

New luxurious condominuims this year are not more than 7000 units.

CBRE Thailand has predicted that in 2017 high-end condominiums will be newly launched in Bangkok not more than 7000 units. It is considered the lowest number within the period of 2 years since 2015 which there were 8,000-9,000 united newly launched.

Accumulated supply from both horizontal project and high-end condominiums during 2015-2017 is 11000 units which are separated into Single-House project, Twin House project and Townhouse project at the price of 30-100 Million Baht located at downtown Sukhumvit, Satorn, Silom and Lumpini. Besides, there are 283 units within 5 Kilometers. Out of town or in suburb, there are also 1500 units. For condominium at the price of 1.5-3 hundred thousand Baht per Square metre, there are 90000 units of accumulated supply.

Watch out for artificial demand-Bubble

Mr. Prasert Teadulayasatid, the chairman of Thai Condominium Association revealed that this year, there are condominiums being transferred one by one. This is the result of the sale back 2-3 years ago. The group that should be particularly observed is luxurious condominiums at the price of 2 hundred thousand Baht per square meter or more as there are some signs of artificial situations and the purchases for speculation more. Economic Bubble is appeared in some projects and area.

At present, big companies with quite big amount of market share who have already learned the lesson from Tom Yum Kung Crisis in 1997 have developed data system for industry alert. Such data is accessible and a part of decision making in business operation. Besides that, the financial institutions are being stricter in lending loans as they believe that it is getting harder for economic bubble to happen.

It is time to observe if the real estate market can remain stable consistently in the second half of the year as expected by Guru or not. However, it is centain that it is the challange for entreprenuers to adjust their strategies and always adapt in order to close the sales as expected.

Credit: ddproperty.com

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