Condo projects facing oversupply

City condominium developer in May delayed construction of their projects in the past year, say experts property.

The developers are equipped with an estimated supply of up to 50000 condominium units in Bangkok more and a 20 percent increase in construction material costs.

Customers who purchased units with a value of Bt30, 000 per square meter or less in the last year could lose their down payments, because the developer can not continue with the high construction costs.

Assoc Prof Manop Bongsadadt, president of Thailand's International Real Estate Federation, the estimated average demand for residential projects in Bangkok and its environs on 66000-80000 units per year, and almost 40 percent as condominium projects. But almost 20000 units this year were launched almost exclusive 30000 existing units.

Meanwhile, a number of property developers plan to introduce other city condominiums numbering 30000-40000 units in the second half of the year.

That means city condominium projects this year in connection with the last years, number 80000-90000. Compared with real demand on the market, Manop believes city ownership flats are equipped with a surplus and a possible bubble situation.

Nexus Property Consultants managing director Apisit Limlomwongse agreed with Manop and adds that nearly 30 percent of customers buy city condominiums investors were now planning to generate rental or speculators hoping to generate high profits from the sale.

"We can not separate how many buy, rent or for sale, but the trend has shown strong growth this year compared to last year," he said.

Results of the research of the Real Estate Information Centre presented yesterday at a seminar entitled "The Property Market Outlook 2008" showed that residential projects launched grater Bangkok in the first nine months of last year accounted for 227000 units. Of those, 150000 units are low-rise projects such as single-family houses, double-row houses, or houses, while the rest of 77000 units are high-rise buildings or condominium projects.

Of the 77000 private housing in the past year, 48723 were sold than in the first nine months and the rest are in an ongoing sales process.

Housing Business Association director Issara Boon Yong said construction costs increase as much as 20 percent, a series of condominiums with prices town of less than Bt30, 000 per square centimeter reached is no longer in a position to develop their projects because their costs have increased from Bt18 average, 000 per square meter between Bt20, Bt23 and 000, 000

If they continue to build their projects, they will be losses rather than profits, he said.

Issara estimated city condominium-construction projects with costs rising almost 100 numbered.

Preuksa Real Estate director Prasert Taedullayasatit with Issara agreed, and added that this year would be a hard time for real estate developers of condominiums town, if they do not change their concepts to meet customer demand.

"We believe that the developers that the development of city property floor by concentrating on the lower to mid-May record market losses than gains, if they do not change their condominium concept," he said.