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1 Apr 2015

Real Estate and Construction

Greater Bangkok Housing Market, 2015: Developers Awaiting Recovery (Current Issue No. 2610 Full Ed.)

Although the 1Q15 property market was supported by declining mortgage rates, it was plagued by several downside risks, e.g., a laggard economic recovery that has forced some prospective homebuyers to delay purchases. In addition, consumer purchasing power has not fully recovered due to the current hefty cost of living and household debt amid rising home prices and stagnant consumer incomes. Such risks have weakened investments and sales in Greater Bangkok property market over recent years.
Given this, we at KResearch expect that investments into new residential projects in Greater Bangkok during 2015 will reach perhaps THB319-342 billion, shrinking 7.0-0.5 percent from the 11.0 percent contraction reported for 2014.
Despite numerous risks ahead, developers continue to see opportunities in Greater Bangkok property market. As a result, new residential projects have been steadily launched by established and new developers. Nevertheless, KResearch is of the view that they may require many contributing factors to succeed. In new residential project investments, developers will likely take a more cautious approach right now because many may want to avoid risk by accelerating marketing promotions to sell existing housing units instead. Their marketing strategies should be made more prudent, given the unfavorable business environment that affects property developers in different ways.

Since sales at many new residential projects have been more sluggish than seen in previous years, developers may introduce special campaigns to attract prospective homebuyers, likely focusing on product differentiation when targeting niche or high-end buyers, being important segments amid the slowing economy. Aside from domestic homebuyers, some developers have sought international clients, as well.

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