Purple patch pops

Nonthaburi feels the mixed impact of the new line with massive new launches and unsold units

The Purple Line, which is under construction, is due to open in August running from Bang Sue to Bang Yai for 23 kilometres and 16 stations. Patipat Janthong

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The country's uncertain economic prospects are likely to affect housing demand in the second half, but developers are cautiously launching new residential projects in a few locations.

Metha Angwatanapanich, senior executive vice-president for business and low-rise development at SET-listed developer Sansiri Plc, say developers should be sure of their locations before launching a new project in the second half as the economy is still unfavourable.

"If the location is in demand, a project can be sold whenever it is launched," he says. "If GDP improves in the second half, the market will resume as more homebuyers in the middle to low-end segments will be approved for mortgages."

The Real Estate Information Center (REIC) reported major districts in Nonthaburi topped the list for unit launches, both for condos and low-rise houses in Greater Bangkok in the first four months this year. Some districts in Nonthaburi also have the largest supply of units remaining for sale.

Samma Kitsin, director-general of the REIC, says the key driver is likely the Purple Line, which is due to open in August running from Bang Sue to Bang Yai for 23 kilometres and 16 stations.

The centre's research shows a quarter of low-rise houses launched from January to April this year were in Bang Kruai, Bang Yai, Bang Bua Thong and Sai Noi, all in Nonthaburi. This was the largest number in low-rise launches in Greater Bangkok. Bang Bua Thong ranked third for total supply and first for unsold units.

For condo supply, the largest number of new units was in Nonthaburi with 3,207, accounting for 23% of the total launched in the period.

Two of the top five districts in Greater Bangkok for low-rise units remaining for sale as of the end of 2015 were also in Nonthaburi: Bang Bua Thong and Bang Yai. They had a combined 10,560 units comprising 40% of the total in the top five.

The situation was the same for condos. The most unsold condo units were in Muang Nonthaburi with 9,458, or 16% of the total condo supply in Greater Bangkok.

Second was Muang Samut Prakan with 7,592 units remaining for sale. These are also the top two districts for condo supply in Greater Bangkok with 21,623 and 16,659 units, respectively.

"The skytrain is scheduled to open an extension to Samut Prakan soon," says Mr Samma.

The absorption rate for these two districts was also lower than the average of 78% for all Greater Bangkok condo units, with 142,658 units sold out of 220,514. The rates in Muang Nonthaburi and Muang Samut Prakan were 56% and 54%, respectively.

The REIC also reported 14,063 condo units remaining for sale in locations along the Purple Line, accounting for 38% of the 36,981 total units from 48 projects as of March 2016.

The glut of condos along the Purple Line led some developers to freeze their new projects there and observe the effect once the Purple Line starts operation.

"The supply along the line is still too high. We postponed launching two condo projects on Rattanathibet Road and in Bang Rak Yai until next year," says Methee Vinichbutr, chief financial officer at SET-listed developer Singha Estate Plc.

Boon Choon Kiat, managing director of MAI-listed developer Chewathai Plc, has come to the same conclusion with its two condo projects in Nonthaburi having 30% still unsold after launching in 2014-15.

"We have no plan to start new projects along the Purple Line as there is an oversupply," he says. "It is not the right location as supply is high and demand is weak."

Chewathai will launch two new sites in the second half: a high-rise condo project worth 1.5 billion baht on Phetkasem Soi 27 and a single-house project worth 400 million baht in Rangsit Khlong 1. It is confident of strong demand in both locations.

Poomipak Julmanichoti, managing director of property consultant Plus Property Co, says even once the Purple Line starts operation the glut may still not be absorbed.

"It's not about the effect of the Purple Line operation. It's about homebuyers and their ability to get mortgages approved," he says.

Tritecha Tangmatitham, managing director of SET-listed developer Supalai Plc, says the company would evaluate the housing market along the Purple Line before deciding to launch new condo projects there.

"We have a land plot for new condo development near CentralPlaza WestGate. We will wait for good sentiment in the condo segment after the Purple Line starts running before any launch. If sentiment is not good, we will wait to launch next year," he says.

Some developers are confident about their locations for new project launches in Nonthaburi during the second half.

Pairoj Wattanavarodom, managing director of J.S.P. Asplus Co, a new subsidiary of MAI-listed property developer J.S.P. Property Plc, says it plans to launch a large low-rise housing project in Bang Bua Thong in the third quarter this year.

It will be located on an 86-rai plot close to Wat Borom Raja Kanchanaphisek Anusorn. The project worth 2.5 billion baht will comprise a total of 600 units of all low-rise categories: townhouse, duplex house, shophouse and single house.

"While the low-rise supply in Bang Bua Thong is saturated, it is not that way in all locations in the district and nor is demand limited everywhere," he says.

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