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Residential Market to Bounce Back in 2021
Published: December 30, 2020 at 8:19 am
The market should see a growth in sales by 2021
After nearly a year of slow business, the Real Estate Information Center in Thailand expects the residential real estate property market to make a full comeback in 2021.
This means that the REIC sees more units being offered in the market, and better values for potential investors to look at by next year.
According to REIC Director-General Vichai Viratkapan, property developers had already held back on launching a number of projects in early 2020. This was before the COVID-19 pandemic began, and was actually due to loan to value (LTV) adjustment measures.
The lockdown imposed by the government in April to contain the virus only served to shrink the residential market even further. With foreigners unable to enter the Kingdom, sales in condominium units dropped to almost zero until July.
The REIC also sees a significant drop in new supply units in the residential market for this year. From 2019’s 148,639 units, the REIC only sees 79,408 units.
This drop is equal to 46.6%, or nearly half of the figures recorded year-on-year.
The REIC also saw contractions in housing estates and condominiums of 34.7% and 59.2%, respectively. The REIC also estimated the value of new housing units to be at THB422 billion, 30.6% lower than 2019’s THB609 billion.
However, the REIC sees these statistics to improve further by 2021.
For instance, new supply units are expected to grow by 11.9% next year. The value of housing will also see an increase by 3.9% at least. The REIC also sees condominium projects reporting a 25.1% growth in sales next year.
Housing estates are also expected to increase by 4.1%.
By year-end 2020, there will be 319,528 condo units available. This is 6.1% higher than the available supply at the end of 2019 and is brought about by the decline in sales throughout 2020.
Finally, the REIC expects growth in remaining unit sales by 6.3%, and a growth in value of 4.8%. The demand in condominiums will continue to grow by 16.5%, although demand among foreign owners is still seen to be slowing down due to flight restrictions.
KGI Securities Analyst Napat Vorajanyavong sees Thailand’s property market as influenced by positive and negative factors in 2021.
Mr. Napat says that growth is inevitable, especially with an imminent economic recovery, the resumption of infrastructure development, and a demand/supply adjustment from the 40% drop in supplies in January to October of 2020.
However, growth can still be affected by close competition between condo developers, a lower demand in both foreign and domestic markets, and high bank rejection rates for loans involving lower-end pricing segments.
The KGI analyst also sees factors like aggressive price cutting from developers with low-level backlogs as affecting the growth potential of the property market, as well as high competition in high rise outlook for the first half of fiscal year 2021.
Finally, Mr Vapan sees a lower take-up rate for new condos at 25% in October, and this will result to stiff competition between developers in the first half of FY 2021.