Real Estate : oversupply and speculation on the rise

Interesting… The president of the Thailand’s International Real Estate Federation, himself, start to speak about “oversupply” for the condos market in Bangkok…

You know my positions… as a good contrarian, when the boiler room itself starts to say that the wind is turning around… it’s time to buy an outbound ticket : one way.

Assoc Prof Manop Bongsadadt, president of Thailand’s International Real Estate Federation, estimated average demand for residential projects in Bangkok and the surrounding area at 66,000-80,000 units a year, with nearly 40 per cent being condominium projects. But nearly 20,000 units have been launched this year, exclusive of nearly 30,000 existing units.

Meanwhile, a number of property developers plan to launch other city condominiums numbering 30,000-40,000 units in the second half of the year.

That means city condominium projects launched this year combined with last year will number 80,000-90,000 units. Compared with real demand in the market, Manop believes city condominiums are facing an oversupply and a possible bubble situation. (Nation)

Bold, isn’it ? But wait, it’s getting better.

Nexus Property Consultants managing director Apisit Limlomwongse agreed with Manop, adding that nearly 30 per cent of customers buying city condominiums now were investors planning to generate rental fees or speculators hoping to generate high profits from sales.

“We cannot separate how many buy for rental or sale, but this trend has shown strong growth this year compared with last year,” he said.

Again, we need to understand that this kind of language, from thai people involved in the real estate business, is quite new.

They say exactly what I’ve been saying on this blog since one year (read here).

And it confirms 2 basics observations, on the ground, that everybody with a little common sense and who is living in Bangkok can make :

-cranes everywhere, glossy advertisings everywhere, new condos everywhere… The heat is definitely on.

-once finished, most of these new condos buildings… stay remarkably… empty. At night, with only a few lights… Now, that’s strange, isn’it ?

But, confident we remain : the new government will save us. Interest rates will go down. Mega projects will boost the demand. And no, there won’t be any crisis.

Gimme more.