Bubble not expected, but caution urged for developers

Although a real estate bubble is not seen as a problem in Thailand, it would take at least 11 months for condominium developers and up to three years for single houses to clear their current stocks, according to the Agency for Real Estate Affairs (AREA).

At the same time, the Kasikorn Research Center is suggesting developers exercise caution to ensure supply does not exceed real demand amid vulnerable economic conditions and rising interest rates.

Sopon Pornchokchai, president of the AREA, found 110,666 residential units available for sale in the greater Bangkok area at the end of June, which theoretically would take about 18 months on average to sell if no additional supply entered the market.

Of total stocks, 32.8% (36,352 units) are townhouses, 31.8% (35,187 units) single houses, 24.6% (27,209 units) condos and the rest semi-detached and commercial houses.

The AREA believes available stocks, which account for 2.57% of the 4.3 million completed units, has not yet become a threat, as the ratio is only half that before the 1997 economic crisis.

Dr Sopon estimates single houses priced at 3-5 million baht will take the longest to sell at 49 months, condominiums going for 1-2 million baht only six months to clear and townhouses costing 5-10 million baht one year.

"The current amount of stock does not represent a threat, but developers of new single houses in remote locations with no convenient accessibility and utilities should be cautious," said Dr Sopon.

Read more in Bangkok Post...