Most residential property developers have postponed the opening of their new projects since the beginning of 2021 due to unfavorable market conditions and the high level of unsold residential units. They have also adjusted their business strategies in line with market conditions. According to the Agency for Real Estate Affairs (AREA), new resident units launched in the Bangkok Metropolitan area totaled 25,257 during 1H21, a 15.9 percent decline YoY. The steepest fall was seen in new condominium units because of the elevated level of unsold units, and the fact that developers have shifted their strategic focus towards the low-rise housing market as there is real demand in this market. Moreover, it is less time consuming to build low-rise homes and easier to manage risks.
Concurrently, to reduce risks and bolster business liquidity, residential property developers have launched numerous special marketing promotions to induce buyers such as discounts, free stay, special mortgage rates and gifts, thus presenting a good time for those wanting to buy homes. Such promotions are also intended to shore up home sales although sales are projected to be lower than those seen during pre-COVID-19 levels. According to AREA, new home purchases in the Bangkok Metropolitan area grew 37.7 percent YoY during 1H21.
Looking into the remainder of 2021, KResearch is of the view that there are challenges and high fragility in the residential property market even though the COVID-19 situation has begun to show signs of stability amid steady declines in the number of infections. Although the market will continue to be supported by the reduction in home ownership transfer fee (for homes costing not more than THB3 million/unit), effective until December 31, 2021, the board-based impact of severe and persistent COVID-19 on economic activity is projected to delay the recovery in the residential property market to its pre-COVID-19 levels. Given this, KResearch is of the view that residential property developers will become more cautious towards launching new projects during the remainder of 2021. New homes available for sale in the Bangkok Metropolitan area may reach approximately 41,000-48,000 units, the lowest in 18 years, and home purchases in the Bangkok Metropolitan area are projected to total 57,000-63,000 units during 2021, representing a decline from that reported for 2020.