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4 Nov 2016

Real Estate and Construction

New Homes Launched in Greater Bangkok Likely Contract for 3rd Consecutive Year… Developers Focus on Low-Rise Projects in 4Q16(Current Issue No. 2789 Full Ed.)

During 4Q16, property developers have been adjusting their sales plans of residential projects in alignment with changing market conditions byplacing greater weight on horizontal housing projects than on condominiums. Moreover, leading property companies targeting broad consumer segments are delaying affordable housing projects for low-to-medium income earners and focusing more on high-end buyers instead.
Because developers have become more cautious towards new residential projects and the market changes noted above, we at KResearch expect that new home sales in Greater Bangkok in 2016 will reach only 93,000 units, shrinking 14 percent YoY, representing a contraction for the third consecutive year.
Looking into 2017, it is expected that investment in the residential property market and home sales overall should recover, supported by continuing low mortgage rates and possibly higher employment – thus greater purchasing power – if private investment picks up. This would likely reduce the number of unsold homes and create a supply-demand balance in the market, thus raising developer confidence.

Aggressive penetration into the high-end residential market will no doubt heighten competition within the segment during 2017. Developers vying for land in central business districts towards the development of such projects will drive up land prices in those already expensive zones, thus likely to become a major challenge to property business in 2017.

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Real Estate and Construction