Bangkok Real Estate Activity in April

Real estate activity in Bangkok market was vigorous in April with 41 new projects that will include 11,263 new units with a total value of 29,470 million baht. The new housing units are mostly condominiums with 5536 units (49%), followed by single family homes with 2879 units (26%), townhouses with 2364 units (21%). These new units are mainly located along the extension of the Purple Line. (Bang Sue – Bang Yai) and the Pink Line (Chaengwattana – Ramindra), the new mass transit underground train lines being developed by the MRT.

Interms of the developers who are involved in these new projects, 70% of the units are from nine companies listed on the Stock Exchange of Thailand including Pruksa Real Estate PLC, Land & House PLC, Lalin Property PLC, Major Development Plc, Asian Property Development PLC, LPN Development PLC, Sansiri PLC, Thanasiri Group PLC, Supalai PLC. In terms of location three of the newly launched projects are located in inner Bangkok and 29 projects are in greater Bangkok areas such as Chaengwattana Road, Ramindra Road, Nawamin Road, Ladprao Road, Srinakarin Road, Bangna -Trad Road, Thepharak Road, Rama 2 Road, Ekachai Road and Kanchana Bhisek Road. The remaining nine projects are located outside Bangkok’s outer edge in areas which have direct transportation systems direct into the city center and are near communities such as Samut Sakhon and near industrial estates such as Rojana Industrial Park and Wang Noi.

Real estate sales in the past four months were in a stable condition including both vertical and horizontal residential by accepting that doing business today with pressure from economic risk factors and principal costs increase in both direct and indirect ways. Particular principal cost interest that affect consumer feelings who might delayed their decision on making a purchase. Every 25 satang of interest increase impacted consumers by causing them to pay 2% more. The most affected housing market are projects with houses that cost less than 3-5 million baht. After the Monetary Policy Committee (MPC) increased interest rates another 25 satang to 2.75% it is estimated that the annual interest rate policy may soon be higher than 3% to control inflation

The impact of increasing interest rates is affecting the decision to purchase new products and affecting the transfer of ownership that may affect sales. There have been 112 new residential projects launched in 2011 totaling 28,683 units and a total development value of 68,749 million baht in the Bangkok metropolitan and surrounding areas with a new housing average price of only 2.397 million, while in 2010 the average price was 2.587 million baht.

In 2011 there will be a combined 426 new projects that will launch, down 4% from 2010. The numbers of new opening units will be around 108,995 units which is a decrease of 7%. The total value of these developments may be lower than in 2010 by about 14%. However, in 2011 the situation should be back to normal with very little oversupply. However, if more new construction tops 100,000 residential units per year in the next one to two years a real estate bubble may occur in late 2012.

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