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Residential market in key provinces faces state of oversupply

The residential market in provinces such as Khon Kaen, Phuket, Chiang Mai, Prachuap Khiri Khan (Hua Hin) and Chon Buri is in a state of oversupply, with the number of new projects launched since the start of 2012 exceeding demand, according to property experts.

A joint survey by the Government Housing Bank's Real Estate Information Centre (REIC) and the Agency for Real Estate Affairs (AREA), along with another by Pruksa Real Estate's research department, shows the number of residential projects launched in the major provinces outside greater Bangkok had grown grow by more than 200 per cent since the beginning of 2012.

This rate of growth exceeds the ability of demand to absorb them from the market.

For example, the supply of detached housing, townhouse and condominium projects launched in Chiang Mai in 2011 was worth Bt2.1 billion, but the value of new launches had risen to Bt14 billion last year - nearly 600 per cent higher in the space of just two years.

In Chon Buri province, the supply of residential projects was worth Bt22 billion in 2011, but this had risen to Bt50 billion by the end of last year after Bangkok-based property firms such as Sansiri, LPN Development, NC Housing, Supalai and CP Land expanded their investment in the area, which includes Pattaya.

Phuket, meanwhile, recorded project launches worth Bt3.3 billion in 2011, while new supply increased to Bt12 billion over the next two years.

Khon Kaen recorded zero units launched by property firms in 2011, but then followed this with Bt6.1 billion worth of new projects in 2012 and Bt3.18 billion the following year.

Pruksa Real Estate managing director Prasert Taedullayasatit said that according to the company's own research, combined with the joint REIC-AREA survey, the supply of residential projects in the main provinces now exceeded demand.

As a result, the company has had to delay the launch of additional projects in the provinces.

"We are focusing on Bangkok and its suburbs rather than expanding our provincial investment, as we believe supply in the provinces exceeds demand," he said.

Sansiri president Srettha Thavisin, whose company has expanded its investment in the provinces since 2011, said the developer had delayed the launch of new provincial projects this year after witnessing only slight demand growth.

"We will focus on selling our existing projects in the provinces, rather than launching new provincial projects at this time," he said.


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