Real estate : large inventory of unsold condos in Bangkok

The supporters of the boiler room start to tremble… If it was true… ? If we were indeed heading toward a recession ?

The question is purely rethorical of course… ๐Ÿ˜‰

I showed that the land transactions nationwide were falling at historic low levels (look the chart)… we know since several months that we are facing an oversupply of condos and hotel rooms in Bangkok.

But no, the boiler room was adamant : the market was healthy.

I started to believe that we weren’t living in the same city ! Read my article (august 2007) : “Real estate : a glimpse from the ground“.

With one very simple observation : the light test. No light at night in so many of those newly built and “soldout ” condos and buildings.

Even recently, they told ud that Thailand was “insulated”. Read it ! It’s true : “Thailandโ€™s property market is well insulated from the global financial crisis“. Gracious, isn’t it ?

Well suckers, book it. You are going down. ๐Ÿ˜‰

Bangkok may find itself with a significant oversupply of city condominiums located around mass-transit systems if demand tumbles next year once the impact of the global economic crisis strikes Thailand’s economy.

This was the message from property experts yesterday at a seminar entitled “Outlook for City Condominiums around the Mass-Transit System”, organised by the Real Estate Information Centre (REIC).

An REIC survey has shown 175 condominium projects located within 2 kilometres of the Skytrain and the subway. These have 66,232 units worth more than Bt200 billion. About 69 per cent of these units have already been sold, leaving 31 per cent, or 20,761 units, as market inventory.

REIC director-general Samma Kitsin said the supply of condominium units this year had been close to that for last year. However, demand has fallen significantly, leaving a larger number of unsold units in the market than at this time last year.

We must warn property developers to reduce the size of their residential projects, because demand is dropping,” he said. (Nation)

It’s not “may face”. It’s “Bangkok faces a freaking oversupply”. Do you seriously believe that Santa Claus will come and buy all those empty condos ? With the global economic downturn and the very volatile political situation in Thailand ?

Have sweet dreams…

10 Responses to “Real estate : large inventory of unsold condos in Bangkok”

  1. 1 Bob 2 November 2008 at 2:06 am

    Interesting! After the 1997 crises real-estate prises bottomed out late 2001 to early 2002, where units at buildings like OMNI tower were selling for 25-30,000 baht/m2.
    Real-estate prices donโ€™t drop like stocks, so it will be a slow and painful decline over then next 2-3 years. No need to rush in, just watch, keep cash on the side and wait until some desperate owner is giving up hope. I think 50-60,000 baht/m2 will eventually be the going rate for the new projects that developers have been promoting for 80-120,000 baht/m2.
    Just my 2 cent,

  2. 2 Bangkok Pundit 2 November 2008 at 10:20 am

    About 69 per cent of these units have already been sold, leaving 31 per cent, or 20,761 units, as market inventory.

    I wonder whether the sold units include those who paid the initial deposit and then were hoping to flip it by selling the “slip” (ie no large deposit being put down just a contract that you will later pay up). I can’t see anything put the price going down. The rise in prices over the last 7 years is so great in some areas I can’t fathom that people can afford the down payments in this economy when it comes time to pay.

  3. 3 ThaiCrisis 2 November 2008 at 10:33 am

    Of course, it’s all included.

    This is why the situation is even much worse : too many “investors” are buying condos… for either “renting” or “flip selling”. Or “mai ru”. They don’t even know what to do with it !

    To see a project like Noble Reflex “sold out” in 1 day, and even booked 3 times… is of course totally insane… when like I wrote… a building from the same company at 500 meters is still unoccupied (“sold out” but empty).

    (200 meters away (soi Aree), there is beautifull low rise building, very high end : 14 appartments at 20 millions ! Built (apparently) by a company from Singapore… Open since 1 year. Guess what… ? Totally empty of course ! At that point it’s not real estate anymore, it’s monney laundering. ๐Ÿ˜‰ )

    Even from an an asian perspective, it doesn’t make sense. It shows that we have serious imbalances on the market.

    People denied it in the US, in UK, in Spain, in France (“the crisis would never cross the Atlantic”)…. “London is soooo different and so special darling you can not compare with the US”, etc.

    From Tokyo to New York to Bali to Bangkok, to Moscow to Mumbai to Vancouver, to Dubai : the same BULLSHIT over and over, for years : “the local market is different”, “we won’t be affected by the crisis”, blablabla etc.

    Of course the Thais weren’t different : “Bangkok is special, the market is healthy”. etc.

    Special my arse.

    It would be highly funny if it wasn’t tragic for the economy.

  4. 4 absolutelybangkok 2 November 2008 at 11:33 am

    If you buy convenience, convenience, convenience even during rough times you won’t lose value.

    Happened so after 1997. Money was lost with sub-prime objects and locations.

    You can still be safe even in a difficult market.

    But expect losses if you bought for the sake of buying with not much thought put into it.

  5. 5 chinesethai 2 November 2008 at 1:29 pm

    I was going to ask similar question whether the sold units have included those who just paid the initial deposit but BangkokPundit has done so.

    I have been wondering for 5 full years whether who the developers would sell those luxury condos to. A friend of mine bought 2-3 condos in central Bangkok but he usually lives in his home in the outskirt of Bangkok. He sold them last year because he knew that the demand that we have seen for 5 years was not real. Usually, the prices of those condos are not affordable for most Thais. And I don’t believe there are not that many foreigners wanting to come and live in Thailand.

  6. 6 chinesethai 2 November 2008 at 1:56 pm


    Yesterday I watched Thailand’s Money Channel. A famous property developer still boasted that although the Thai property market is slowing down, it is insulated from the global crisis. He encouraged the audiences to make decision now since, he claimed, this is another good time to buy property. ๐Ÿ™‚

  7. 7 ThaiCrisis 2 November 2008 at 2:29 pm

    Sure. For those people it’s always a “good time to buy”.
    Their bred and their butter depend on it.

  8. 8 James 3 November 2008 at 5:31 am

    A friend of mine bought a unit in Reflex and she only makes $2,800 a year. I’m not sure how she got the financing but she did and the bank’s paying and she hopes to rent it out later. This is the story with thousands of Thais.

  9. 9 ThaiCrisis 3 November 2008 at 9:25 am

    ->James : 2800 USD per year ???? 8000 THB per month ?

    If it’s real, then it’s the perfect summary of the ongoing market’s imbalances… and the coming catastrophe…

  10. 10 kokothemonkey 3 November 2008 at 12:15 pm

    Residential prices may drop in 2009

    Prices for residential properties in Thailand could fall in 2009, due to a combination of falling construction material costs and a slowing in demand, according to some developers.

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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