New investment opportunities and changing buyer priorities are amongst the changing face of real estate in Thailand according to CBRE Thailand, a leading international property consultant.
Ms. Artitaya Kasemlawan, Director of Advisory & Transaction Services – Residential Sales, CBRE Thailand says, “The pandemic which has slowed down sales of residential properties has opened up new opportunities for investors. The first opportunity is the lowered price with condominium developers pushing out various sales strategies offering buyers promotions and special discounts which are rarely found in a normal market situation.”
“Secondly, buyers can now afford a larger-space unit under the same budget. For instance, in normal times when a budget may allow for an 80-square-metre condominium unit with 2 bedrooms, now the same amount can purchase a 90-square-metre unit with the same number of rooms. For condominiums, this change in space is considered significant.”
In the short term, condominium developers are focusing on clearing out their unsold inventory while the detached housing market continues to attract end-user buyers, the property consultancy says.
Even without the outbreak, the condominium market was moving towards equilibrium as supply was gradually slowing down. Developers have turned their focus to selling their unsold off-plan and completed projects.
However, property investors should not expect every unit to have a discount or the discount may be subject to conditions depending on the developer’s need for cash flow. While the price may play a key role, the market is currently very competitive and investors should not overlook other basic factors such as the project’s location, design, amenities and accessibility.
Another opportunity for long-term investment is units in prime buildings which are rarely available in the market might also be offered for sale. “The rare units which have re-entered the market will mostly be offered with a lower discount. A long-term investor should rather see this as a unique opportunity to own a valuable asset,” says Ms. Pornpimol Phuengkhuankhan, Head of Advisory & Transaction Services CBRE Thailand.
The work-from-home trend, transport route expansion and health-conscious living will become major factors in buyer demand as a result of the Covid-19 outbreak, according to CBRE Thailand.
The single-detached housing market has been less affected compared to the condominium market. This segment has no speculative demand as most buyers are end users who want to buy for their own residences.
Since the ending of the lockdown, more buyers have been visiting sales galleries and the sales performance is almost at the same level as pre-Covid-19, according to CBRE.
It is now a buyer’s market, whether it be real estate or consumer goods, said the consultancy. However, property is a product with a number of factors to consider including demand and supply in each area, location, design and sales performance of individual projects. These will influence promotions, especially discounts that are not offered at the same rate.
Buyers will require a considerable amount of time to compare and sales should progress gradually, said CBRE.
“The recovery of the residential market will be divided into two phases,” said Ms Aliwassa Pathnadabutr, Managing Director at CBRE Thailand. “The first is when business operations return to normal, as many already have begun, but with international travel restrictions, this period will depend on demand from domestic buyers who are expected to take 1-3 months to make their decisions. “The essential factor is the overall sentiment of the business sector. If there are stimulus measures to boost spending, the market will recover faster, perhaps in the latter part of the third quarter of 2020.
“The second phase of the recovery will take place once international travel reopens, beginning with business trips followed by leisure travel, which could be seen in the fourth quarter based on this year’s forecast. This will depend greatly on the government’s policies, availability of a vaccine and the ability to prevent a resurgence of the virus.”
In addition, she identified two issues likely to become critical for the residential market. “First is location, which we should keep an eye on. Buyers will choose between the inner city and midtown/suburban areas,” said Ms Aliwassa. “As people are spending more time at home and working from home, the need for space usage will increase. Coupled with mass transit expansion outside the metropolitan area, some buyers will reconsider their housing choices in terms of value related to usable space.
“The other trend is health and environmental care. Developers and designers will have to bear in mind changes in buyers’ behaviour and highlight specifications that advance the health and convenience of residents, such as usable area, air quality and new technologies.
“CBRE has already witnessed from past crises where product development was improved in response to changes in the demands of the time. Examples include more compact sizes of condominium units; more efficient unit layouts; fully fitted or fully furnished provisions; and higher quality of specifications. “It will be interesting to see how new products in the residential market will be developed in response to the changes in buyers’ requirements after Covid-19.”