Substantial drop in condo construction and sales during the third quarter

According to international property firm Knight Frank, the number of residential units in new condominium proj¬ects launched in Bangkok in the third quarter was 35.2 per cent lower than the number of units offered in projects launched in the first quarter.

The reason, the firm said, was the increasingly unfavorable economic con¬ditions.

As well as the drop in units under offer, the number of units sold in the third quar¬ter was 32.2 per cent down on sales in the first quarter of this year.

However, average selling prices increased by 6.8 per cent over those in the first quarter.

Knight Frank Chartered (Thailand) said Bangkok condominiums newly launched in the first quarter of this year offered 5,778 units. Those launched in the second quarter offered 4,904 units, and in the third quarter, 3,744 units. Compared with the first quarter figure, new supply diminished by 23.7 per cent in the second quarter and by 35.2 per cent in the third.

A key factor contributing to the diminution in the third quarter was unfa¬vorable economic conditions, the firm said.

The average percentage of units sold, compared with the number launched, was 81 per cent in the third quarter, the same as the figure for the second quarter.

Despite a recent decrease in con¬struction costs, the average selling price of condominium units in Bangkok increased in the third quarter, due to ris¬ing land costs. Moreover, the fall in both units launched and units sold did not put pressure on developers to reduce their selling prices in the third quarter, Knight Frank said. The average selling price of newly launched condominiums in the third quarter stood at around Bt68,000 per square metre, an increase of 6.8 per cent over prices in the first quarter.

The firm said most newly launched supply in the third quarter was aimed at the middle market, and some projects located very close to rapid transit servic¬es still gained good market response despite the economic slowdown and more cautious spending.

Knight Frank said new supply of Bangkok condominiums would proba¬bly continue to fall in the final quarter of the year because of worsening economic and financial circumstances that would lead developers to be more careful about investing in new projects.

This will limit new supply and the total number of condominium units launched in 2008 will probably end up being 15 to 20 per cent lower that the total new sup¬ply launched in 2007.

The takeup of units at end of this year will be slower because people will be leav¬ing their money in the bank. Moreover, banks will be stricter in extending mort¬gages, the firm said.