Purchasing power in the Bangkok condominium market in the past two years has decreased, because prospective buyers are still concerned about the long-term economic situation and stricter loan approval procedures by banks. Some have postponed decisions to buy condominiums and others have been unable to complete transfer of units because they could not obtain mortgage loans.

But a developer who had started building a condominium cannot stop construction just because sales are going poorly. Even if the building contains 400 or 500 units and only a few have been sold, the developer needs to complete the entire building and hope that market interest picks up.

All unsold units, as well as common facilities, are the responsibility of the developer until the units are transferred to the buyers. It is thus in the developer's interest to do everything possible to make the building appealing to prospective purchasers.

There are currently about 28,000 unsold units in existing condominium projects now on sale in the Bangkok market. This excludes the many other units held by investors. Out of the total of 28,000 units, construction of about 8,300 has been completed. Approximately 57% of all completed and unsold units are selling for less than 3 million baht each, with 33% offered at 2-3 million baht.

TOP 4 LOCATIONS

The area along Sukhumvit Road (Sois 1-79) is home to many completed buildings with a lot of unsold units. But prices are not cheap -- as many as 86% of the unsold units carry prices starting at 200,000 baht per square metre.

The area along the Blue Line, specifically Charan Sanitwong and Phetkasem roads, also has many completed and unsold condominium units available. In many cases this is because the original asking prices were considered high relative to other projects in the area and long skytrain lines under construction. Most of the completed and unsold units in this area are selling at 2-3 million baht each.

The area along the Purple Line, specifically Krungthep-Nonthaburi Road, has around 990 unsold units, most of them in projects launched in 2014 and 2015. This partly reflects the oversupply in this area.

Along Phahon Yothin and Vibhavadi Rangsit roads and smaller soil connecting them, around 1,240 condominium units are on the market, with approximately 50% selling for below 3 million baht.

The condominium market overall this year will be quieter than last year as developers try to offload inventory and the market adjusts to tighter mortgage-lending rules. As construction nears completion on more buildings launched in the last 2-3 years, more units will become the responsibility of developers.

We have observed that since 2016, many developers have been avoiding launching new projects in some locations, especially along the Blue and Purple lines, until the supply-demand balance in the market is restored.

Slow sales of ready-to-move-in units are directly affecting all developers, and some are responding by reducing prices as they want to improve cash flow. Completed units can be sold immediately and developers can get the cash, which is totally different from newly launched condominium projects.

Surachet Kongcheep is the managing director of Phoenix Property Development and Consultancy Co Ltd.