A new year comes with new property launches. However, in the previous year, there were reports from analysts and experts saying that Thailand’s condominium property market may slow down due to the new regulations on mortgages, the uptrend in interest rates, and the prolonged US-China trade war. Aside from these, what more can we expect to see in the Bangkok condominium market this 2019?
Let’s take a look.
More Properties near Current and Future Mass Transit Systems
For the past years, the Thailand property market has seen an increase of condominium growth along current and future mass transit systems. In a research done by Knight Frank Thailand for Bangkok’s condominium market outlook, they said that for more years to come, the Bangkok property market will see more condominiums proliferating locations near mass transit stations. And, one of the reasons for this apparent growth is the ever-increasing land prices at the city centre.
With the several new BTS extension projects about to spread through Bangkok’s hard to reach areas, we might expect a property battleground where developers fight to build property near these new BTS stations.
Thailand’s skytrains play an essential role, with many using it to escape the horrible traffic during rush hours. Now, skytrains carry as much as 750,000 passengers a day, which can be fully-packed especially during rush hours.
Because of this, the centrality of skytrains urged property developers to focus on properties conveniently near BTS stations…and there are more stations to come!
For reference, even CBRE Thailand’s managing director Aliwassa Pathnadabutr said that “Mass transit has been a key factor in the boom in the condominium market since 2002 up to now.”
As of June 2018, Thailand’s downtown area has a total existing and future supply of 32, 517 units, said Pathnadabutr. Of these units, there are:
22% is located 800 metres near the MRT
44% located within 800 metres of BTS
32% located more than 800 metres from a mass transit system.
Aside from the famous Sukhumvit line, new infrastructures to look out for include:
BTS Light Green Line Extension (Mo Chit – Kukot and Bearing – Samrong)
MRT Blue Line Extention (Taopoon – Thapra – Hualamphong)
MRT Pink Line (Kae Rai – Minburi)
MRT Orange Line (Rama 9 – Ramkamhaeng)
MRT Yellow Line (Ladprao – Huamak)
Soon enough, lots near these mass transit lines are most likely to go up as well. As a direct effect, Knight Frank Thailand further said that rent and sale prices along these areas are foreseen to increase substantially based on a project’s proximity to convenient transportation.
Mortgage Regulations To Tighten
In an effort to curb mortgage and property risks, the Bank of Thailand imposed tighter regulations on mortgage lending by reducing the loan to value ratios for certain categories of purchasers.
According to CBRE Thailand, the following regulations will be effective on April 1, 2019
Second home buyers will be restricted to a maximum loan of 80% of the property value if the first mortgage is less than three years old and for mortgages THB 10M and higher.
Second home buyers who have made payments on their first mortgage for three years or longer can still obtain a loan of 90% of the property value.
For third and subsequent mortgages, the buyers will only be able to borrow 70% of the property value.
These new regulations aim to favour first home buyers with “…genuine demand as opposed to buy-to-rent investors with multiple outstanding mortgages, who are searching for yield,” CBRE Thailand said in addition to their report.
Because of these new regulations, some expect the Bangkok condominium market to slow down, especially with the middle- to lower-end segments. A cause of this is the decision of some developers to delay launches for three to five months to give customers time to prepare for the larger down payment of 20%, said Prasert Taedullayasatit, former president of the Thai Condominium Association.
Now presented with a higher risk of unsold condominium units, Vichai Viratkapan, the Real Estate Information Center’s acting director-general warned Thailand property developers. He said that developers should check the residential stock in locations where they wish to build a project before making any decisions.
Developers Attempt to Find More Local Residents as well as Foreign Investors
For 2019, CBRE Thailand expects to see roughly more than 40,000 newly completed condominium units for the whole of Bangkok. CBRE Thailand reports that property developers are trying to find locations with high demand from Thai locals. This may be a move in response to the tighter grip on mortgage regulations. Some developers also aim to make their properties affordable as well for this market.
On the other hand, no one is stopping the production of luxury properties, which usually costs THB 300,000 per square metres or more. These luxury properties are found in the city centre where prices for prime lots are rising extremely high.
Property developers in this segment mostly rely on sales from expats or foreign investors from China, Hong Kong, and Singapore.
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