Starved of Chinese cash, Bangkok’s condo market is in a critical condition and recovery may be years away.
More than 100,000 units are on the market in the capital with major developers simultaneously hemorrhaging cash and offering huge discounts.
Sansiri, a business driven by overseas buyers, saw net profits plummet 85% to 62 million THB this past quarter with presales revenue falling from 14 billion THB in 2018 to just 3 billion THB last year.
Rival AP (Thailand) saw first quarter net profit drop 40% from a year ago to 618 million THB on a revenue drop of31% to 5.4 billion THB.
“The condo market is likely to slow both in terms of supply and demand”, Risinee Sarikaputra, Director of Research and Consultancy at Frank Knight Thailand said. She predicts it will take another two years to improve.
China and Hong Kong property buyers transferred 39.6 billion THB to Thailand to buy condos in 2018 according to the Bank of Thailand. Singapore, Taiwan and Japan were also in the top 10 foreign buyers.
But that cash began drying up as the Thai baht soared in 2019 to be Asia’s best performing currency. Then the coronavirus hit and what was left of Chinese money evaporated.
Meanwhile Thai developers continue to build. The country added an average of 105,000 condo units a year to the market from 2010 to 2018 even as salesonly averaged 96,000 a year, according to Krungsri Research. Amid the pandemic they’re finally hitting the brakes.
Frank Knight says the market will add only 12,000 per year, down from the original prediction of 20,000 units. Developers are now desperate to offload stock with discounts of 50% not uncommon, including in the Sukhumvit business district.
The government’s Real Estate Information Centre says a proposal to offer visas with property investments is being considered.