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Demand softening in some areas
KANANA KATHARANGSIPORN
Bangkok Post, Wednesday January 24, 2007

Though the Bangkok condominium market should continue to boom this year, developers should be more cautious in some locations where there are signs of an oversupply and limited demand, according to the property consultancy Agency for Real Estate Affairs (AREA).

Deputy managing director Wasan Kongchan mentioned the Rama III area as an example, as there was no mass transit and the absorption rate was limited.

''Another is the Ratchadaphisek area where a large number of condominiums have been launched during the past few years,'' he said at a seminar on the Bangkok housing market yesterday.

He said the condo supply in Ratchadaphisek this year would total 9,827 units, including 8,510 that would be launched in 2007, whereas about 4,300 units were acquired last year.

Meanwhile, there are currently 2,790 condo units available for sale in the Rama III and Silom areas where another 4,200 new units would be added in 2007. The area should be closely monitored as 1,993 units were sold last year.

''The most interesting locations for the city condo market will be Onnuj, LaSalle, Soi Baring and Bang Chak where the new extension of the Bangkok skytrain will reach,'' he said.

Phloen Chit Road and the beginning of Sukhumvit are areas where demand exceeds supply. They contain many luxury condominiums that attract interest from foreigners and expats, but sales might be affected by tighter regulations under the Foreign Business Act.

At the end of 2006, there were 9,380 city condo units worth a combined 45.75 billion baht remaining for sale, from a total outstanding stock of 44,975 units. AREA forecast that 26,070 units in 61 projects would be launched this year.

Of the new amount, 18,780 units will be located in the central business district and other parts of inner Bangkok. All told, there would be 28,160 city condo units added to the market in 2007, with 70% of them priced below three million baht.

From a total of 35,655 condo units sold last year, 14,594 were city condos, with 82% or 12,039 units priced below three million baht, said Mr Wasan.

City condo demand has been rising steadily from 5,990 units in 2005 to 10,003 units in 2005 and 14,594 units last year. Demand this year is expected to stabilise at 15,000 units, with political and economic concerns having limited impact on buyers' decisions if units are near mass transit.

Mr Wasan said the overall residential market in 2007 would slow down down slightly. The outstanding stock of all housing units at the end of 2006 was 92,462 units worth 24 billion baht, up from 77,000 units in 2005.

Of the 92,462 units available, detached houses led the market at 37,000 units, followed by condominiums (24,500) and townhouses (22,000).

Of the 66,000 newly launched units last year, townhouses led the table with 18,000 units, followed by 9,900 condominiums and 9,300 detached houses.

The absorption rate of new housing supply last year was between 45% and 50%, showing a reasonably favourable market situation. ''If the rate drops to 20-30%, the market will be in a worse situation,'' said Mr Wasan.

Last year, second-ranked Preuksa Real Estate was the most active developer, launching 4,616 units worth 5.7 billion baht, followed by the market leader Land & Houses with 3,695 units worth 14.17 billion baht, the highest in the market.

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