Bangkok property investment sales down, residential segment 'fragile' in Q3: Report

OCTOBER 25, 2018 - 4:42 PM

BANGKOK’S property sector saw a steep drop in investment sales in the third quarter, real estate firm Edmund Tie & Co (ET&Co) has reported, in a research update on the Thai market.

Deal value fell by 59.7 per cent from the previous quarter to 10.3 billion baht (S$431.7 million), which came exclusively from domestic buyers.

Meanwhile, the residential market has turned “increasingly fragile”, the report noted, citing weak demand in both the central business district (CBD) and non-CBD segments.

The average take-up rate for the quarter’s new launches in the CBD was 31 per cent, down from 58 per cent in the same period the previous year, while the resale price index stayed flat.

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The average unit selling price was also unchanged, at 330,447 baht per square metre (psm).

“Although local and international investors continue to invest in the CBD condominium market in Bangkok, they are more cautious when selecting a property. Higher land prices and prudent buyers are proving to be challenging for developers,” wrote the ET&Co team.

“At present, there are no signs of the market taking a serious dip, but sales rates, supply and growth in average prices are all slowing as the market makes a more comprehensive and manageable adjustment.

“A lack of growth in the rental market also adds pressure on residential investors.”

Still, ET&Co noted that the quarter saw several investment transactions involving land purchases, often slated for residential projects.

The firm said that it expects more interest from investors from other Asia-Pacific countries towards the end of the year, with Thai investors projected to focus on hospitality options in overseas markets.

“At the same time, we anticipate that domestic investors will continue to seek property exposure. Leading property developers will continue to acquire land in prime and secondary locations in Bangkok’s CBD to develop further residential properties and retail malls,” said the report.

“As a result of this, we expect to see land values in Bangkok to continue to increase. This will push smaller investors into less prime locations and some to look for alternative methods of acquiring land.”

Otherwise, monthly prime rents for “Grade A” offices in the CBD rose to 850 baht psm, up by 4.3 per cent on the year before, with no change in overall office stock.

Downtown retail rents slipped by 0.2 per cent on the year before, to 2,595 baht psm per month, while average retail rents in the mid-town area were up by 1.26 per cent year on year at 1,610 baht psm per month.