Bangkok’s condo market, once a favourite of Chinese investors, faces a bleak year thanks to the novel coronavirus. The covid-19 coronavirus outbreak is keeping Chinese and foreign buyers away.
Foreigners are set to account for as little as 10% of purchases in 2020, down from a fifth two years ago. A consultancy Agency for Real Estate Affairs says Chinese buyers provided the bulk of overseas interest in Bangkok’s condo’s. Chinese are now hampered by the travel curbs and economic havoc sparked by the coronavirus.
“The demand from foreigners may disappear in the first half following the outbreak,” said Sopon Pornchokchai, the consultancy’s president. Adding that there are 100,000 vacant condominiums in and around Bangkok.
“We’ll need to rely on local buyers, but that won’t be easy.”
The Bank of Thailand has also loosened mortgage-lending rules to encourage domestic purchasers, but developers remain wary. Naporn Sunthornchitcharoen, the chief executive of major developer Land & Houses Plc, last month said the firm is “afraid” of the condominium segment.
Even before the coronavirus spread from China, foreign interest was floundering.Even more because the economy reliant on trade and tourism deteriorated. Furthermore amid currency strength in 2019 and the US-China trade war.
Bangkok Condo buyers remain cautious
Land & Houses doesn’t plan to open any new condominium projects this year. Another developer, Singha Estate Plc, is “very cautious” about buying land for residential offerings because of concerns about an oversupply of property in certain locations, Head of Investor Relations Maysenee Ratnavijarn said.
The real estate sector slowdown is among the many challenges ahead for the economy in 2020. Gross domestic product growth may slow to as little as 1.5% this year. A six-year low, a government agency forecast last week.
Thailand’s 55-member Property Development Index has tumbled about 19% in the past 12 months. Worse than the 9% slide in the overall Thai stock market.
Developers are also expected add 6,000 new condo’s to the market in Bangkok in the first quarter of 2020. Down 40% from a year earlier, according to Phattarachai Taweewong, associate director of Colliers International Group’s Thai unit.
“It’s tough situation in 2020,” Mr Phattarachai said. “Hopefully the market can go back to balanced supply and demand again in the next three years.”
Source: Bangkok Post