2019 is the year for condominium end-user buyers

This year is the year for condominium end-user buyers, with many developers saying they will concentrate on clearing completed but unsold condominium inventory in response to weaker demand, partly due to the Bank of Thailand’s stricter mortgage requirement policy for second- and third-home buyers.

The residential market this year will be driven more by end-user demand, with fewer investors or speculators compared to recent years.

Many developers say they will focus more on low-rise residential new launches, dominated by single detached houses and townhouses rather than condominiums this year. The low-rise residential market is entirely driven by Thai end-users, not buy-to-rent investors, foreigners or speculators.

CBRE expects to see a significant increase in new low-rise housing projects, raising the level of competition in the segment.

The condominium market is going to be slower this year. Condominium developers, instead of planning many new launches, will concentrate more on unloading their unsold completed condominium inventory, completing buildings, transferring titles to existing buyers and selling remaining units under construction.

CBRE believes the condominium market is going to be driven mainly by the end users — people who buy units to live in themselves. There will be less speculative buying off-plan of condominium units for resale before construction is completed.

Buy-to-rent investors will be more selective because the number of expatriates, the main source of demand for the central business district (CBD) rental market, did not increase, nor did the expatriates’ rental budgets.

The reason end-user buyers should be cheerful is that many developers are going to offer impactful incentives to purchase, including some significant discounts and aggressive promotional campaigns.

Purchasers will be able to see a range of completed projects in their preferred locations and to compare completed products, rather than rely on the brochures and show units of under construction developments. They can see exactly what they will get, making comparisons much easier.

The discounts will be available only for buildings in unsold inventory and CBRE does not expect prices to fall across the whole market. In fact, the opposite is the case — prices still rising in the most sought-after, prime, CBD condominium developments.

Overall, the market-cooling measures will be positive in the longer term, preventing the buildup of a bubble and allowing real demand to take over from speculative demand.

There will still be new off-plan launches at every level of the market but the developers will be more cautious and increasingly focus on domestic end-user purchasers in the entry and mid-level market. This means they will have to provide a product people want in terms of size, design, and specification and in their preferred locations at a price they can afford.