A glut of condominiums creates a buyer’s market in Bangkok. (Photo by Tawatchai Kemgumnerd)

A glut of condominiums as Thailand’s economy wavers and stricter mortgage-lending rules kick in is creating a buyer’s market in Bangkok.

Some 65,000 new apartments were added to the city last year, an 11% increase over 2017 and the most since 2009. Demand, however, is tepid with developers reporting take-up rates of just 55% and average asking prices decreasing 6% year-on-year, a Knight Frank report shows.

It’s a chance to get into the market as home builders look to clear excess stock at lower prices, according to Aliwassa Pathnadabutr, a managing director of CBRE Group in Thailand.

“The overall condominium market will be slower this year but there are still opportunities in some locations with the right product at the right price,” she said. “We believe the market is entering an equilibrium stage where prices will be adjusted to a more realistic level.”

The Finance Ministry cut its economic growth forecast last month, predicting the slowest expansion in three years as the country grapples with moderating exports and heightened political risk after disputed elections. Revised mortgage-lending rules that came into effect in April may also limit the appeal of real estate because they restrict how much money some second-home buyers can borrow.

Bangkok is also being impacted by a drop in Chinese visitors. Chinese investors have historically made up the bulk of foreign property buyers in Thailand but their presence has waned as China’s economy slows and capital controls limit outflows.

CBRE said in a 2019 real estate market outlook report that it was concerned about Thailand’s high reliance on foreigners. “Most of the recent foreign buyers are investors and CBRE doubts they will live in the units they have bought. Foreign sales are highly sensitive to economic conditions of the buyer’s home country.”

And it isn’t just Bangkok that’s hurting. A total of 454,814 residential units across the country were left unsold last year, with a value of $41 billion, according to Sopon Pornchokchai, president of the Agency for Real Estate Affairs.

Still, Knight Frank at least believes the glut and falling prices may be short lived, citing Bangkok’s resilience and planned infrastructure projects that will renew the city.

“Ask anyone who’s been in property how many times they’ve heard the bubble will burst?,” the firm’s Bangkok-based head of residential, Frank Khan, said. “I’ve heard this more than 10 times, but in my last 15 years, it’s never burst.”