A recent survey suggests there is no oversupply in the Bangkok condominium market with a modest 21% vacancy rate, while real estate investment remains attractive with an average total yield of 11.5% per year, according to the consulting firm Agency for Real Estate Affairs.
The company surveyed 103 condominiums completed within the past eight to 30 months in eight zones at 11 locations in central Bangkok.
Of the 40,027 units in total, 31,584 or 79% were occupied. Of the occupied units, owner-occupants totalled 22,914 units, or 73%, and the rest ware tenants.
AREA president Sopon Pornchokchai said the data indicated no oversupply, though there were no details available on unfinished units.
However, Thamrong Panyasakulwong, president of the Thai Condominium Association, maintains that signs of an oversupply exist in some locations including On Nut-Bang Na, Ari-Phahon Yothin and Ratchadaphisek.
He warned developers to conduct thorough market research in the locations they want to tap before launching projects, and to make sure they know how many unsold units already exist in the area in order to prevent a glut.
Papin Thanasrivanichchai of CIMB Thai Bank also sees no oversupply of condominiums but recommends developers carefully study the market and launch products meeting real market demand.
She said the bank was not worried about the loan-to-value curbs on new mortgages by the Bank of Thailand as each bank has its own regulations to control credit extension.
Starting next month, banks will not be allowed to lend more than 90% of the value of new condominiums priced below 10 million baht. The central bank concluded that 100% loans and, in some cases, zero down payments, were too attractive to speculators.
"It's more worrisome that the central bank might possibly issue more new measures next year," she said.
AREA's research shows that Ramkhamhaeng was the location with the highest occupancy rate at 91%, followed by Ratchada-Lat Phrao (86%), Phahon Yothin-Phaya Thai (83%), Sukhumvit 1-69 (80%) and Sukhumvit Soi 71-103 (79%). The lowest occupancy, at 30%, was in the Rama III-Riverside area.
The highest total yield was in Chaeng Watthana-Rarm Intra at 12.7%, followed by Phahon Yothin-Phaya Thai (12.6%), Sukhumvit 71-103 (12.2%), Ratchada-Lat Phrao (11.9%) and Ramkhamhaeng (11.7%). The lowest yield was in Rama III-Riverside at 8.6%.
The highest price appreciation was in Chaeng Watthana at 6.2% and the lowest in Rama III-Riverside at 1.8%. The highest rental return was in Phahon Yothin-Phaya Thai at 7.5% a year and the lowest in Pin Klao-Rama VIII at 5.4%.
Chaeng Watthana-Rarm Intra had the highest total yield with the lowest rental rate, averaging 191 baht per square metre per month.