Oversupply of condos along Blue Line, says Colliers

[webfact]

Oversupply of condos along Blue Line, says Colliers

By THE NATION

 

 

Property consultant Colliers International (Thailand) has signalled that there is an oversupply of condominium projects along the Blue Line of Bangkok’s mass transit system.

 

The company’s associate director, Phattarachai Taweewong said over the past six years more than 37,000 units have been made available in the area, or as many as 6,000 units per year. 

 

According to a survey in August, as many as 34 condominium projects with 25,501 units worth a total of Bt61.87 billion were up for sale in the area. Of the total, only 68 per cent or 17,421 units were sold, with 8,080 units still up for grabs. He said he is concerned the supply is not in balance to demand, adding that some projects have experienced slow sales, while some developers have stopped construction midway, returning money to those who have made reservations. 

 

Many projects have also launched heavy campaigns to promote the unsold units. 

 

Meanwhile, Piya Prayong, chief executive officer of Pruksa Real Estate Plc, admitted there was an oversupply of condominiums in some segments of the Blue Line, particularly units within the range of Bt3 million and Bt5 million. 

 

He said his company will slowdown the launch of new condo projects along the Blue Line for a certain period, adding that the supply-demand should improve in the next two to three years. He added that his company will launch projects along other mass-transit routes such as the Green Line instead.

 

Source: https://www.nationthailand.com/news/30377421

 

-- © Copyright The Nation Thailand 2019-10-16

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[donnacha]

I question the wisdom of anyone, even a Thai citizen, buying property in Thailand while there is so much uncertainty around the continued ability of Westerners to spend time in the country.

The current supply was a gamble based upon growing demand from Westerners and lots of capital trying to get out of China five years ago. Things have changed a lot. There is not much that the military could do about China devaluing the Yuan and cracking down on how much money their citizens could spend on foreign property, but the needless damage they have done to Thailand's reputation, organically built over half-a-century, as a prime long-stay destination for Western tourists is a self-inflicted wound.

Western long-stay tourism is not a huge factor in the Thai economy, but it does figure disproportionately in this particular part of the property market, providing the relatively easy rental income that justifies the inflated buying prices of these condos. If the number of Westerners willing to risk not being able to stay decreases, it softens the market, potentially creating a ripple through the entire market, driving rental rates down. This, in turn, makes Thai property less attractive for Chinese investors, while increasing the risk for the Thai banks underwriting the highly-leveraged Thai investors. 

 

Edited October 15, 2019 by donnacha

[rkidlad]

2 hours ago, webfact said:

He added that his company will launch projects along other mass-transit routes such as the Green Line instead.

Already an oversupply on this line also. Especially in the area where I live. 

[fruitman]

6 hours ago, donnacha said:

I question the wisdom of anyone, even a Thai citizen, buying property in Thailand while there is so much uncertainty around the continued ability of Westerners to spend time in the country.

The current supply was a gamble based upon growing demand from Westerners and lots of capital trying to get out of China five years ago. Things have changed a lot. There is not much that the military could do about China devaluing the Yuan and cracking down on how much money their citizens could spend on foreign property, but the needless damage they have done to Thailand's reputation, organically built over half-a-century, as a prime long-stay destination for Western tourists is a self-inflicted wound.

Western long-stay tourism is not a huge factor in the Thai economy, but it does figure disproportionately in this particular part of the property market, providing the relatively easy rental income that justifies the inflated buying prices of these condos. If the number of Westerners willing to risk not being able to stay decreases, it softens the market, potentially creating a ripple through the entire market, driving rental rates down. This, in turn, makes Thai property less attractive for Chinese investors, while increasing the risk for the Thai banks underwriting the highly-leveraged Thai investors. 

 

How many westerners have you seen in the blue line?? Me zero!

[ChipButty]

Over priced Junk anyway

[mercman24]

i think anyone buying a condo for 5 million + wants their head read, near a BTS line i looked at a condo at ONNUT years ago, with trains running continuously for 18 hours a day, non stop, no thanks. now is see they are building condos at, NANA, with one nearly finished, one just starting, some wanting 7.5 million +

[new2here]

Price not withstanding, I do think that there is some long term value to be had in buying near mass transit like the new Blue line.. I don't that in and of itself is foolish.. What does give me some pause is the pricing.. I think given there appears to be an market imbalance, I think if you can find a good value in a unit that is ideally located-- then that would be a great buy.

 

Long term, I do think units that are at, near or convenient to one of the new or soon-to-be-opened mass transit lines (or car park-and-ride units) will be a solid buy and I'd doubt that buyers would go underwater long term.. A buyer may not see massive value appreciation especially on the short-term due to apparent supply/demand imbalance, but as that supply is absorbed and the imbalance corrects, I suspect buyers will some some modest level of gains.

[Pattaya46]

2 hours ago, donnacha said:

I question the wisdom of anyone, even a Thai citizen, buying property in Thailand while there is so much uncertainty around the continued ability of Westerners to spend time in the country. //

And another member who thinks that westerners are very important for Thailand, or even indispensable... 

Seriously, what is the part of condos along this Blue Line owned by westerners ? I don't have the value, but certainly very very small. Nothing to do with tourists areas such as Pattaya.

Edited October 16, 2019 by Pattaya46

[IAMHERE]

Still, there are plenty of westerners with that 3 million baht plus the wherewithall to place 800,000 in a Thai bank account. I don't have the moxy to have that much tied up in an uncertain exit strategy. If I had several million pounds I'd sing a different melody.

[RichardColeman]

I will only rent a Thai property on the ground floor with no-one above me. 

[quandow]

It's the same all over Thailand. I've lived in several difference places over the last 15 years, and when living in a condo, I look out at night and see at most 10% of the units with lights on. Yes, some places are purchased as vacation homes, but it's STILL a lot of dark condos.

[Letseng]

11 hours ago, donnacha said:

I question the wisdom of anyone, even a Thai citizen, buying property in Thailand while there is so much uncertainty around the continued ability of Westerners to spend time in the country.

The current supply was a gamble based upon growing demand from Westerners and lots of capital trying to get out of China five years ago. Things have changed a lot. There is not much that the military could do about China devaluing the Yuan and cracking down on how much money their citizens could spend on foreign property, but the needless damage they have done to Thailand's reputation, organically built over half-a-century, as a prime long-stay destination for Western tourists is a self-inflicted wound.

Western long-stay tourism is not a huge factor in the Thai economy, but it does figure disproportionately in this particular part of the property market, providing the relatively easy rental income that justifies the inflated buying prices of these condos. If the number of Westerners willing to risk not being able to stay decreases, it softens the market, potentially creating a ripple through the entire market, driving rental rates down. This, in turn, makes Thai property less attractive for Chinese investors, while increasing the risk for the Thai banks underwriting the highly-leveraged Thai investors. 

 

How many Westerners are actually staying longterm/permanent in the country? Working expats rarely buy property as their stay is time limited. The ones I know rent.

Impact on market from Westerners will not even cause a light ripple.

Edited October 16, 2019 by Letseng

[donnacha]

12 hours ago, Letseng said:

Working expats rarely buy property as their stay is time limited. The ones I know rent.

Impact on market from Westerners will not even cause a light ripple.

You quoted my entire post, why not read it too? ????

I was writing about renters.

I said that "in this particular part of the property market" the million or so long-stay Westerners provide relatively easy rental income for the highly-leveraged Thai and Chinese investors.

Highly-leveraged means that these investors are placing all their bets on rental demand (in the part of the market they have targeted) continuing to grow - not demand staying the same but actually increasing. A continuous stream of government decisions to make it harder for their target market to stay in Thailand, along with a strengthening Baht, worsening pollution, and growing popularity of alternative destinations, all combine to reduce the number of Western renters. That is a catastrophic problem for the investors who were riding that particular wave.

A property crash is due at some point, but the way in which long-stay Western tourists have been chased away could well turn out to be the spark that sets the Thai economy on fire again.

[RoadWarrior371]

19 hours ago, IAMHERE said:

Still, there are plenty of westerners with that 3 million baht plus the wherewithall to place 800,000 in a Thai bank account. I don't have the moxy to have that much tied up in an uncertain exit strategy. If I had several million pounds I'd sing a different melody.

Yeah, ~ $125K of assets tied up to have an oceanfront condo is chump change for many.  Especially if you price the same in Miami or Hong Kong or Singapore.  Not a lot of money these days.

[moontang]

Just stick with fundamentals.  Chinese are willing to pay 35 times annual rent in some prime areas.. seems foolish to me.  However, no property taxes here and condo fees aren't bad, compared to sitting on a unit in NYC or SFO.  16 times rent is more realistic.  Heard the song about no lights on for 15 years.. Most of the clientele don't waste electric.. balcony lights are as rare as a functional crosswalk.  I have heard of units in Hua hin going for a third off super inflated prices, but nothing like the giveaways in Phoenix and Vegas in 2009-2011.

[Wake Up]

On 10/16/2019 at 9:57 AM, RichardColeman said:

I will only rent a Thai property on the ground floor with no-one above me. 

And a quarter goes it everyone who cares what you do. ????