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Colliers: Price cuts helped condo supply move along

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Prices set at a 20% discount to those offered for existing nearby units and good locations were two factors helping new condo supply sell out during third-quarter launch periods, say property consultants.

Phattarachai Taweewong, associate director of research and communications at Colliers International Thailand, said condo demand and supply recovered in the third quarter after bottoming out in the second quarter, which was the lowest period in the past decade.

According to Colliers, new condo units launched in the third quarter totalled 8,334 units from 18 projects worth 28.4 billion baht, up from 1,000 units in the second quarter but down 25% from the same period last year.

Demand picked up with a sales rate of 43%, higher than the second quarter’s 29%.

Out of 18 projects, two by SET-listed large developers were able to close sales during the launch period. They are located in inner-city areas and On Nut.

Three other sold-out projects were launched by the Treasury Department in upper Sukhumvit, Huai Khwang and Yannawa.

“The projects that sold out very quickly were those offering prices 20% lower than others previously launched in the same area,” Mr Phattarachai said. “The locations are also good.”

He said pricing was a key strategy developers adopted in the midst of the market slump. Low prices can accelerate the decision process for real demand and attract investment buyers aiming for a capital gain.

The strategy was widely accepted by developers carrying a load of unsold, completed condo units, as they were able to close sales with discounts and campaigns.

The slower pace of new condo launches this year helped the market come to a well-balanced point after developers delayed many launches in the light of poor confidence hampering sales rates.

Colliers estimates that the amount of new condo supply in Greater Bangkok this year will not exceed 20,000 units, which would be the lowest figure in a decade.

In the fourth quarter, there will be fewer than 10 new condo projects launched as many developers delay projects in the pipeline until next year, Mr Phattarachai said.

Some have shifted to low-rise houses, a market where demand remains strong, and are focusing on draining unsold inventory.

Neeranuch Kanokvilairat, manager of research and consulting at Edmund Tie & Co Thailand, said developers turned to virtual sales galleries and social media to entice buyers in countries with high Covid-19 infection rates.

“Foreigners from China and Hong Kong made online bookings for good potential projects located near the BTS and MRT routes, both for speculative purposes and their second homes in Thailand,” Ms Neeranuch said.

The trend of condo demand in Bangkok among foreign buyers will not be limited to the central business area, but will also expand to other areas of Bangkok along the skytrain and MRT lines. This is an indication that Bangkok condos are still attractive to the foreign market, as long as new infrastructure and the urban lifestyle are extended into various areas of the city.

According to the government’s policy to allow foreign visitors to enter the country in the fourth quarter, visitors coming for medical purposes can stay for at least 90 days, while a 90-day special tourist visa could be extended twice, for 90 days each.

“We anticipate an increase in the number of units transferred from foreign buyers who made an online booking and those who will make decisions during their visit to Thailand after the country reopens,” Ms Neeranuch said.

The inner Sukhumvit area, such as Thong Lor and Ekamai, will be the prime locations for foreign visitors.