As the global economic crisis spread like wildfire in the second half of last year, fears arose that the Thai housing market would fall into inactivity.
Indeed, the market did slump badly in almost all dimensions, with one significant exception: the surge in the number of condominium completions in Bangkok.
For the four months from July to October, 16,900 new condominium units were completed in Bangkok and its perimeter, compared to 7,900 units in the first six months of the year.
The Real Estate Information Centre (REIC) expects condominium completions to reach 30,000 for the whole of 2008 - the highest total since 1997.
Condominium units now represent about 40 per cent of all new housing completions in Bangkok and its five surrounding provinces. In Bangkok itself, that ratio has hit the 50 per cent mark, while the figure for detached houses has fallen to 36 per cent. Townhouses and shop houses combined account for 13 per cent, with so-called twin-houses making up the small remainder.
From the 1997 financial crisis until 2005, new condominium unit completions never exceeded 11,000, or a 15 percent share of new housing, in a year. In 2006 and 2007, the number climbed to 17,000 units each year, representing 22 per cent of total housing completions of 74,000 to 76,000 units.
From 1995 to 1997, more than 60,000 condominium units were completed each year, accounting for one-third of the huge housing-completions total of 150,000 to 180,000 units. The carryover effect of prior construction activity in the boom years saw about 31,000 new units finished in 1998. Those high-volume years, however, were followed by many years of low completion rates, as the market absorbed the previously built units.
So, despite the fact that many developers have decided to postpone or downsize condominium projects in the face of the major economic downturn, we will likely see yet another year of high condominium completions in 2009, with more than 30,000 units currently under construction. The downsizing of condominium projects this year announced by some developers will translate into somewhat fewer completed units in 2010, and possibly significantly fewer in 2011.
In March last year, when the previous government was crafting a housing stimulus measure giving benefits to buyers and sellers of completed houses within a specified period, I wrote that the number of newly completed condominium units would grow significantly during the second half of the year and into 2009 and 2010. I also warned developers to make sure that all bookings of yet-to-be-completed units are actually transferred upon completion.
More than 60 percent of the planned condominium units in Bangkok and its vicinity have been sold. Condominiums had been selling rather well in the city and along mass transit routes in the past few years, until the last quarter of 2008.
Foreign expatriates and investors have also scooped up a fair proportion of the higher-end units. But with the shaky economic forecast, it remains to be seen whether these sales will result in the actual transfer of ownership.
Samma Kitsin is Director-general of Real Estate Information Centre (REIC)
The Nation January 20, 2009
