Is it time to lay off condo launches in Thailand?

Demand for Thai condos, even from the Chinese, not up to par, says leading analyst

Demand for condominiums in Thailand is likely to shrink next year and property developers need to strategise accordingly, a leading Knight Frank Thailand analyst told the Bangkok Post.

While condominium supply in the kingdom has been on the ascent for 10 consecutive years, absorption rate in the real estate segment has slumped over the last two years, warned the consultancy’s managing director Phanom Kanjanathiemthao.

Demand for condos from Thai investors has shrunk to the point that they are no longer “hungry” for units, derailing momentum in the segment, the Post noted.

“Local demand dropped the last two years, but we saw growth in the condo market because of overseas buyers, particularly Chinese markets,” said Phanom, adding that even that is contentious since Beijing has been vigilant on capital flight.

Condo launches this year will total around 65,000 units. To maintain market equilibrium, launches must not exceed 50,000 units next year, Phanom suggested.

In the interim, developers are better off shifting to low-rise developments such as single houses, townhouses and duplex houses, as alternatives to condo projects, despite those segments’ relatively limited sales volumes.

Diversifying to industrial estates, offices, hotels, and overseas investments instead of launching condos would be an auspicious move, according to Phanom. Ideal areas for property development at this point include the Eastern Seaboard and the future Eastern Economic Corridor (EEC).