Regional Condo Glut Slows New Project Launches

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Regional Condo Glut Slows New Project Launches
Regional Condo Glut Slows New Project Launches

Unsold condominium units in Cha-am and Hua Hin will continue to slow the launch of new projects this year, says property consultant Knight Frank Thailand.

The agency estimates there are few new projects with a total of only 600 units that are set to open this year. Risinee Sarikaputra, director for research and consultancy, said developers have either delayed or paused the launch of new condo projects in Cha-am and Hua Hin since last year, as there are still many condo units available in the market.

“Developers have acknowledged that there is too much supply of both newly launched and resale condo units in these two areas, while competition in selling prices is quite high, contradicting weak demand,” she said. “Some developers have turned some condo units into hotel rooms.” Risinee said there would only be two or three new condo projects launched this year.

One of them is from the SET-listed developer L.P.N. Development Plc, whose project will have 400 units in the first phase. The o

ther will be a small-scale project, although the operator may delay that project. According to Knight Frank’s research on the Cha-am and Hua Hin condo markets, accumulative condo supply from the two areas was 23,584 units at the end of February, with no new projects or units launched during the period. Last year, new condo supply launched in Cha-am and Hua Hin totalled 1,592 units, down from 3,087 units in 2015.

The largest quantity of new condo supply launched in a single year was in 2011 with 6,079 units, followed by 2012 with 5,503 units. “The huge amount of new supply added in 2011 resulted in a sharp fall in the condo takeup rate to 45.4% from 78.6% in 2010,” she said. Although there was a large number of new condos launched a year later, the take-up rate improved to 56.7% in 2012 as the devastating floods in 2011 that rampaged many parts of Thailand boosted demand in the Cha-am and Hua Hin, among the few locations that escaped the disaster. The rate improved in 2013 to 60.5%, and then jumped to 70% in 2014.

That growth has continued through to this year with a 77.9% rate reported at the end of February. Knight Frank sees limits on new supply launched each year resulting in take-up rate improvements. The agency also reported that there were 221 units sold in the first two months of this year, with around 3,000 units of unsold, completed condominiums in the market.

The agency’s study said the annual unit takeup rate in Cha-am and Hua Hin was relatively steady from 2013-15, ranging between 2,4002,800 units. But that figure dropped in 2016 to 1,823 units, with tightening mortgage criteria partially to blame. By location, the majority of accumulative condo supply, about 15,320 units or 65%, was in Cha-am. The rest was scattered around four locations: Khao Takiab with 2,704 units (11%); Hua Hin at 2,321 (10%), Khao Tao with 1,947 (8%); and inland at 1,292 (6%).

Khao Takiab saw the highest sales rate with 93.5%, as it is considered an extension of Hua Hin, while the property projects there offered lower selling prices. It was followed by inland locations with a sales rate of 89.1%, Hua Hin with 88.8% and Cha-am with 73.7%. Khao Tao has shown the lowest demand and sales rate with 69.5%, as it is the area farthest away from Bangkok. As a result, few developers are interested in this location. Only one project has been launched in the past two years — Bella Costa with 323 units — by SET-listed Property Perfect Plc. – Bangkok Post

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