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Amid the worrying signs that Thailand's property market may overheat,
developers remain optimistic that the high-end market still has momentum, though
speculation is becoming a factor.
"On our side, we are looking to launch various projects during the second half
of the year, especially single detached houses. We do see some oversupply in
certain segments, but still believe that the high-end housing market has
potential," said Adisorn Thananan-narapool, senior vice-president for Land &
Houses Plc, the country's largest residential developer.
Other developers agree that demand from the high-end market continues to remain
strong, but the key is location.
Srettha Thavasin, the president of Sansiri Plc, said: "We just launched our Siri
on 8 project (in Sukhumvit Soi and in a matter of days we have already booked
more than 70% of the project priced at 97,000 baht per square metre."
The market has witnessed a huge influx of supply in the lower to middle
segments, while prices have increased by 60% to pre-crisis levels, according to
Jones Lang LaSalle, the international real estate consulting company. JLL says
the average selling price of condominium units in central Bangkok peaked in 1994
at 52,000 baht per sq m, but began falling in 1995 due to oversupply and
bottomed out at 38,500 baht per sq m in 1999.
Currently, newly launched units have an average asking price of 81,000 baht per
sq m, and prices top 150,000 baht for luxury units in selected areas.
Most developers agree that speculation is rife, especially in the middle and
lower segments, both in single houses and condominium units.
"In the condominium market, units that are priced between one million and 1.5
million baht are witnessing an oversupply, which can be scary for the overall
market," Mr Adisorn said.
Mr Srettha agreed, saying Sansiri's lower-middle income 'My Condo' developments
were prone to speculation.
"We have tried to use various tactics to avoid speculative elements from
purchasing our units, and one such thing we did was to offer buyers of our new
projects a 6% NPV (net present value) discount if they paid the entire down
payment when they booked the unit. We saw a large number of our customers take
that discount," Mr Srettha said, adding that the move was to ensure that
speculators did not buy the units and resell them.
T.C.C. Capital Land, the 50:50 joint venture between T.C.C. Land and
Singapore-based Capital Land, sees some saturation of the local property market,
although supply has not reached the critical stage where it could cause a crash.
"I do feel there is some kind of saturation, but certain segments of the market
continue to show strong demand as evidenced by our successful launch of the
Villa Sathorn project," said Chen Lian Pang, chief executive of non-listed
T.C.C. Capital Land.
"Since our launch a few weeks ago we have managed to sell 76% of the 600-plus
units there and such locations where we have a niche market continue to remain
in demand," he said.
He said the high-end housing market started to reach a saturation point and
location would dictate the success of projects in the future.
Mr Chen's views reflected recent data released by the Bank of Thailand that
showed the property market slowed during the second quarter of this year, with
new land registrations down more than 50% from the same period last year.
The central bank said property transactions also slowed due to weak consumer
confidence and uncertainty over mass-transit expansion plans. New property
registrations in Greater Bangkok fell 30.9% year-on-year in May.
source: Bkk Post
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