Ms. Risinee Sarikaputra, Director of Research and Consultancy, Knight Frank Thailand Co., Ltd., said that the condominium market as of Q3 2020 has improved, compared to the previous quarter, after the government has been able to contain the spread of Covid-19 infections. This has resulted in the return of new units being launched for sale in Q3 2020. If compared to Q2 2020, our research has found that some newly launched condominiums enjoyed a good sales rate during the first phase of sales. These projects offer products and prices that target a sizable buyer group in the market, as well as feature interesting locations that do not house a large number of existing condominiums. Many people may view the purchase of condominiums at this moment to be ill timed, given the economic slowdown, but this time actually represents an ideal opportunity for buyers who are ready. Such buyers can acquire a condo at a price that is not high, and they can enjoy many additional benefits like freebies and special discounts. At present, the market appears to be returning to a balanced state, in terms of lowering pricing that has been too high as well as reducing the glut of condominiums that has been in the market. Developers are slowing the launches of new units and are now starting to develop projects such as single homes, attached homes, townhomes and home offices; the condominium market should thus return with more opportunities in the near future.
From results of a survey conducted by Knight Frank Thailand regarding newly launched condominiums in Q3 2020, the supply stood at 7,943 units, reflecting an increase of 97.5 percent when compared to the previous quarter (newly launched condominiums in Q2 2020 included 4,022 units). However, the new supply decreased by 30.7 percent, compared to the same quarter last year (newly launched condominiums in Q3 2019 included 11,460 units).
For the most part, the newly launched condominiums in Q3 2020 are Grade B units, with prices from approximately 80,000 to 120,000 baht per sq m., representing 52 percent. This is followed by Grade C condominiums, mostly priced from about 55,000 to 70,000 baht per sq m., or 43 percent of the total new launches. There has been only one Grade A project launched, with 380 units, representing 5 percent of the total new launches. On the whole, the newly launched condominiums in Q3 2020 are mostly located in the suburbs of Bangkok, at 68 percent of the total launches, followed by condominiums in the City Fringe area surrounding the Central Business District (CBD), at 26 percent. Only 6 percent of the new launches are units located in the CBD.
As for demand, it was found that during Q3 2020, the condominium market started to recover from Q2. During Q2 2020, the market for newly launched condominiums was severely affected from the Covid-19 pandemic, which clearly diminished purchasing power. For Q3 2020, there were 3,123 newly launched condominiums sold. Therewere a total of 7,943 units launched for sale in Q3 2020, so the sale rate is 39 percent. The sales rate rose by 25 percent, compared to the previous quarter, which had a sales rate of 14 percent.
As for the asking price levels of condominiums in the market during Q3 2020, prices have adjusted downwards for every locale from Q2 2020. The asking price of condominiums in the CBD as of Q3 2020 is 265,000 baht per sq m., which reflects a decrease of 0.7 percent when compared to the previous quarter, where the asking price was 267,000 baht per sq m. The asking price of condominiums in the City Fringe, as of Q3 2020, is 146,000 baht per sq m., which marks a decrease of 0.9 percent when compared to the previous quarter, where the asking price was 147,356 baht per sq m. The asking price of condominiums in the suburbs of Bangkok, as of Q3 2020, is 79,400 baht per sq m., which marks a decrease of 0.7 percent when compared to the previous quarter, when the asking price was 80,000 baht per sq m. The decrease in asking prices of condominiums in Q3 2020 can be attributed to the fact that developers required liquidity in their financial statements. They therefore reduced the prices of condominiums to inject income into their companies. They mostly offered price reductions for condominiums that have already been completed or anticipated to be completed within this year. These condominiums are also able to draw buyers’ attention. At any rate, developer will likely try to keep clearing outstanding stock in completed or nearly completed projects, so prices will remain reduced.
Ms. Risinee offered the opinion that Bangkok’s condominium market outlook during the final quarter of 2020 would see around the same amount of newly launched condominiums for sale as in Q3 2020. She said that there should be around 8,000 newly launched units in Q4 2020. It is expected that there will be around 25,000 to 30,000 newly launched condominiums for sale this year, reflecting a 50 percent decrease from last year. The newly launched condominiums will be priced between 1.5 and 3 million baht, or around 60,000 to 80,000 baht per sq m., targeting a group with the greatest need for residences or those with real demand.
The condominium market in the last quarter of the year is likely to improve slightly when compared to the first half of the year. This is due to the clear reduction in the supply of newly launched units. Also, the formerly overpriced units have adjusted their pricing downwards during the poor economy, which has enabled developers to clear some of their inventory. However, the condominium market may not return to a healthy state for another 2 to 3 years, given the uncertainty around travel into Thailand for foreigners. Even if the borders may be open for some groups of foreigners, the market will still not have recovered to the normal state it was in before.