Housing Sales To Drop 5-10% Next Year

Housing sales to drop 5-10% next year

Published on December 14, 2005

The residential property market, which includes detached homes and townhouses, is next year set to decline in value terms by between 5 and 10 per cent, according to research by property firm CB Richard Ellis.

The firm attributes the decline to slow economic growth, oil price rises and interest rate increases.

Meanwhile, the condominium market will continue with strong growth next year, especially the middle-market offering where unit prices range from Bt3 million to Bt12 million.

Managing director Aliwassa Pathnadabutr said that high interest rates and oil prices would have a negative impact on home buyers next year.

She added that her company expects to see a reduction in the number of developers, as small and medium firms leave the market. Most of the new supply of housing will come from large developers who have access to project development funds and economies of scale in construction and marketing.

The value of newly registered houses next year will be 5 or 10 per cent lower than this year, she said.

“Most property developers will downsize their new housing projects by offering prices averaging Bt3 million to Bt5 million per unit, compared with an average price of Bt5 million to Bt10 million this year.

As a result, the value of housing sales next year will be lower but sales volume should be about the same,” she added.

CB Richard Ellis forecasts a total of 69,000 newly registered housing units by the year-end, up 12 per cent from 60,611 units last year.

In the condominium market, demand will continue to grow next year, especially in the middle market price range of Bt3 million to Bt12 million.

Prime locations for condominiums are near the Skytrain and subway, Aliwassa said.

The market for apartments, serviced apartments, office buildings and retail units will enjoy strong growth next year, thanks to high demand from foreign businessmen who are expanding their investment portfolios in Thailand, she said.

She added that a growing number of foreign investors from the UK, US, Hong Kong and Singapore were interested in forming joint ventures with local property developers to buy luxury condominiums, office buildings, hotels and resorts in Bangkok and tourist destinations such as Pattaya, Samui, Phuket and Hua Hin.

“We believe that foreign investors will buy around Bt10-billion worth of property in Bangkok next year because of the high returns of up to 10 per cent a year,” she said.

Somluck Srimalee

The Nation