New condo supply launched in central Bangkok this year should not be priced higher than existing inventory because a glut remains amid stagnant purchasing power, says a real estate consultancy.
Artitaya Kasemlawan, head of residential sales projects at property consultant CBRE Thailand, said developers are set to launch new condo projects in downtown locations after freezing development during the pandemic.
"While development costs are higher, developers that plan to launch new condo projects in downtown Bangkok may lower margins by setting more competitive prices because there's a lot of unsold units with old prices remaining available," she said.
Meanwhile, the target buyers of this segment in the post-pandemic era are those in Thailand whose purchasing power has not significantly increased, said Ms Artitaya.
Before the pandemic these buyers also included foreigners, with most being Chinese, who now prefer ready-to-move-in units.
CBRE expects developers to continue to focus on clearing ready-to-move-in inventory before assessing the potential of new projects in downtown Bangkok during the second half.
"There will be a gradual recovery in terms of new launches in the downtown area, but that will take time, likely in the second half," she said. "We may only see a relatively modest number of launches in this area in 2023."
According to CBRE, the number of new condos launched in downtown Bangkok this year will total around 7,000 units, more than double that of last year, while those in midtown and suburban locations will rise slightly to 50,000 units.
"Developers will continue launching condo projects in the midtown and suburban areas. The trend to watch is residential developers combining residential and commercial components in mixed-use projects," said Ms Artitaya.
Last year, more than 95% of new condo supply in Bangkok was in the midtown and suburban areas which targeted the low- to mid-end market.
Ms Artitaya said domestic buyers showed a preference for low-rise houses with lower density, and larger and more adaptable spaces.
This year, developers will be even more active in launching low-rise housing projects that target real demand.
"Developers of luxury and super-luxury housing projects will need to provide adaptable spaces to let family members work from home and facilitate multiple generations living under one roof, as well as allocate sufficient car parking with EV charging," said Ms Artitaya.
For the resale condo market, Praphinleeya Phuengkhuankhan, head of residential sales ad hoc at CBRE Thailand, said buyers are more willing to buy older, larger units requiring renovation, as they often provide space not typically found in more recent developments.
"These units generally sell for lower prices on a square metre basis, allowing buyers to invest in a renovation which suits a family's requirements," she said.
Meanwhile, Thai demand for overseas properties continues to favour the UK and Australia, mostly for family education and investment, as well as for family wellbeing and lifestyle fulfilment in locations such as Japan and the Maldives, said Ms Praphinleeya.
