Bangkok Apartments | Bangkok Condos | Bangkok Serviced Apartments

January uptick not the start of condo market recovery

Finished projects still doing well amid slump Despite a 5-10% improvement in sales in January from the average in the fourth quarter of last year, the condominium market is not out of the woods yet, according to Kitisak Jampathipphong, executive vice-president of the property consultant and brokerage firm Harrison Plc. "The property market remains in the emergency room. Foreign investors have gone. Local investors are freezing decision making. Large developers are more cautious about new investment, and just wait and see. Consumers are panicky and not confident in buying real estate," he said. Harrison's sales recovered slightly in January from the fourth quarter but were still below the figure for January 2008. Fourth-quarter sales were down 70-80% down from the first three quarters - a drop from around 3 billion baht to 600 million a quarter. Mr Kitisak said a rise of 5-10% did not mean the market had improved, because the growth was from a floor level. The main markets spurring the increase were for real demand and resales in the mid-priced segment of 2-5 million baht a unit. "Good sales in the condominium market were found only in completed projects and those ready to transfer in the next few months. Buyers wanted concrete units, not off-plan or unfinished ones that they are not confident in," he said. The outlook was different for the high-end segment, priced over 10 million baht a unit or more than 100,000 baht per square metre. Buyers in this sector completely stopped their decisions. In the unfavourable situation they were no longer sure that units they booked or bought could be rented out to expatriates or resold. Buyers in the high-end condominium segment can easily change their minds or delay decisions because most have their own homes, said Mr Kitisak. "Condominiums remain a secondary market. It is their [high-end buyers'] second home or just a luxury good, an unnecessary thing that they easily stop buying when the economy is not good," he said. Foreigners, who accounted for 20-30% of target buyers for luxury condominiums, also have vanished due to the global recession. As a result, high-end condominium sales were almost zero. "Some buyers [of high-end condos] decided to sell their units at a loss as they wanted to enhance their liquidity. They did not want to put more money into the asset and were not confident about financing while banks are more cautious." He forecast that the property market will not revive this year but, because supply has been reduced, he sees signs of a slight decrease in prices as evidence of a crack rather than ruin. But more teaser campaigns and promotions will be used to attract homebuyers because developers need to speed up sales and unit transfers to generate revenue, cashflow and complete projects.

 

< Prev		Next >