While some Bangkok property market watchers say it’s a big fat bubble, one real estate heavyweight refuted that idea but did not rule out a bust in the near future.
Sopon Pornchokchai, president of the Agency for Real Estate Affairs – said to be one of the most reliably independent sources of real estate information – made his comments this week after reviewing market data for the first four months of 2015.
Since January, 30,501 units have launched with a total value of THB130.938 billion, accounting for only housing or owner-occupied residences, according to the agency.
Sopon noted that this seemed a big increase, and said multiplying these figures by three to estimate the rest of the year yielded a total of 91,503 units with a total value of THB392.814 billion for the year.
This would exceed the launched value of THB344.549 billion in 2014, whereas the total units launched in 2014 was slightly higher at 114,229 units.
This was extraordinary, he said.
Sopon said the units launched launched in the first four months, including owner-occupied apartment or condominiums and luxury detached houses, priced at more than THB20 million, constitutes only 3.8 percent of supply, but in terms of value, was as high as THB43.824 billion – or 33.4 percent of the total value launched.
This might contribute to the myth of a bubble, he said.
However, if units exceeding THB20 million were not considered, the total units launched during the first four months would be 29,338 with a total value of THB87.114 billion.
He projects that out to be 88,014 units with a value of THB261.342 billion for the year total.
Compared to 2014, the supply would be down 22.6 percent in terms of value and 21.3 percent in terms of units.
Considering condominiums or owner-occupied apartments with prices below THB20 million, it is estimated that the supply will be 53,268 units during 2015 compared to 64,961 units for 2014. The value would thus be THB136.2 billion in 2015. This implies the supply of condominiums priced below THB20 million per unit will be down by 18.1 percent in terms of value and 16.9 percent in terms of units.
Sopon concluded that while there wouldn’t be a bubble in 2015, there could be a bust due to a sudden drop of supply this year. This, he said, would very much be a concern for developers, financiers, government officers and planners, and the economy of Thailand at large.
Story: DDProperty.com / Photo: Luis Garrido-Julve
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