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High-end condos see price stall

A new condominium project on Phloenchit Road. As of the end of 2018, Bangkok recorded a number of completed condos totalling 579,000 units. PATIPAT JANTHONG

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The price per square metre of new high-end condos being launched this year is expected to stay unchanged from 2018 as new supply competes with unsold stock, says a property consultant.

Suphin Mechuchep, managing director of JLL Thailand, said it may be difficult for a new condo project in the upper-end market being launched this year to introduce a higher presale price than that of supply launched last year.

"Speculation slowed down last year while the resale market was inactive," she said. "There were a number of condo units in the luxury segment that remained unsold. Some now offer presale prices similar to launch prices the past few years."

However, there is no sign of a fast drop in prices similar to the post-1997 financial crisis because most developers are listed firms and have healthy balance sheets. Though they want to drain their stock, the majority of them are not offering discounts, sticking to other gimmick campaigns, Ms Suphin said.

Discounts may be offered for some units that are difficult to sell, such as units with a poor view, she said.

"Condo market sentiment looks tepid, while the overall economic outlook is poor," Ms Suphin said. "The lower-end condo market, which faces an oversupply, is beset by negative factors such as a rise in interest rates and the new lending curbs."

The segment likely to feel the biggest impact from the new lending curbs is condos priced between 120,000 and 150,000 baht per sq m with one bedroom or studio format, as this category was popular among investors buying for rent. Some bought more than one unit.

As of the end of 2018, Bangkok recorded a number of completed condos totalling around 579,000 units. Some 82% of the supply was mass market condos with units priced lower than 100,000 baht per sq m, according to JLL.

In the past decade, the average price of a condo in Bangkok rose by more than 40%. But the pace of price increases has slowed, with a rise of 30% on average in the past five years and 10% in the past three years.

"Last year, price per sq m rose just 5%," Ms Suphin said. "This year it will be the same price as last year."

The Real Estate Information Center earlier reported that there were 2,578 unsold condo units in lower Sukhumvit, an area of high-priced condos, as of the end of June 2018. It was the fourth largest in Bangkok.

Of this amount, 160 units remained unconstructed, 2,009 were under construction and 409 were completed.

The top three locations with the largest number of unsold condo units in Bangkok were mostly in the middle- to lower-end market, with prices of 100,000 baht per sq m and lower.

They were Huai Kwang-Chatuchak-Din Daeng with 6,493 units, Taling Chan-Bang Khae-Phasi Charoen-Nong Khaem-Thawi Wattana with 4,954 units and Thon Buri-Klong San-Bangkok Noi-Bangkok Yai-Bang Phlat with 4,109 units.

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