In the first quarter, Russians and Chinese bought condos in popular resort towns such as Pattaya and Phuket for rental purposes.
The Bangkok Post reported that foreign buyers dominated the condominium market in the first quarter of 2024, with new units concentrated in major tourist destinations and a combined investment value of more than 56.6 billion baht.
Phattarachai Tavevong, director of research at Colliers Thailand, a real estate company, said the first quarter marked the first time more condominiums were launched in popular tourist centres than in Bangkok.
‘We have not previously seen such a significant supply of new condominiums outside of Bangkok. The main driver of this trend has been demand from foreigners, especially Russians and Chinese,’ Phattarachai said.
Pattaya had the most condominiums in the first quarter, with 4,493 units worth 16 billion baht. That’s after 3,302 units were put into operation last year, up 132 per cent from 2022.
Most of the projects were large-scale projects by listed developers, including AssetWise and Origin Property. In the remaining three quarters, local developers expect new condominiums to be introduced predominantly.
‘The significant sales volume in the first quarter is due to strong demand for both own-use and investment purposes. Some Russians and Chinese have even purchased entire blocks in new projects to rent out to compatriots,’ Phattarachai said.
The number of new condominium projects in Pattaya will reach 7,000 units by the end of 2024. However, Phattarachai said the normal volume is usually 3,000 to 5,000 units per year.
‘If this figure is exceeded, the market will again be in an oversupply situation like in 2013-14, when more than 10,000 units were offered annually. Back then, it took the market a few years to absorb the oversupply,’ warns Phattarachai.
The oversupply during those periods had significant repercussions, as 27 projects comprising about 9,000 units have halted sales until now. We are watching to see if these projects will return to the market.
Following Pattaya, Phuket was the second destination regarding the number of new flats, with 3,338 units from 12 projects totalling 25 billion baht.
The figure repeats last year’s historic high of 8,743 units, representing an increase of more than six times from 1,419 units in 2022 and surpassing the previous peak of 6,429 units in 2012. By the end of 2024, Phuket is expected to have 8,500 new condominiums on the market.
‘Before the pandemic, condominiums priced at 120,000 baht and above per square metre were a rarity in Phuket. Today, typical prices range between 150,000-180,000 baht per square metre,’ Phattarachai said.
In Bangkok, the number of new condominiums in the first quarter of 2024 totalled 3,288 units, down 33 per cent from last year and the lowest in 15 years.
‘Bangkok’s condominium market has slowed down since the third quarter of 2023 as developers are in conservative mode,’ said Supasit Witoraporn, property analyst at Colliers Advisory Services.
Supasit said one of the critical problems is the high mortgage rejection rate, especially in the lower price segment of 3 million baht and below, where the rejection rate is 70 per cent.
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