The situation in the Bangkok condo market is still not clear but the absence of Chinese visitors, who enter the country as tourists, has had a sharp impact according to industry leader Dr Apha Atboonwong. She predicts it will take one to two years for the market to recover and find its equilibrium. It comes as GSB Bank recently halted loans for condos in Samut Prakan after it estimated that condo prices had fallen in the province adjacent to Bangkok by 36%.
A leading business figure in the Bangkok condo market has called on the government to set up a ฿ 5 billion emergency fund after Chinese condo buyers appear to have disappeared since Thailand closed its borders to fight off the Covid 19 virus. The senior industry figure said that up to 10,000 condos ordered by Chinese buyers have been left empty. It is coming at a time when, although prices are challenged, the local market is just about holding up.
A senior figure in the condominium industry has called on the Thai government to step in with a ฿ 5 billion fund to help property and condominium developers in Bangkok severely impacted by the Covid 19 pandemic and closure of Thailand’s borders.
Dr Apha Atboonwong, who is President of the Thai Condominium Association, was speaking with Thailand’s Channel 3 TV and revealed that up to 10,000 already built condominium units in Bangkok have been left in limbo or without owners as those paying for the units had ceased.
Number of empty condos not clear
Some estimates suggest that there are currently 100,000 vacant condo units in Bangkok, at present, although this is being questioned by some within the industry as key developers had scaled back production as early as the beginning of last year.
At the end of 2019, Ms Risinee Sarikaputra, the Director of Research at Knight Frank Thailand revealed that close to 100,000 unsold units were on the market at that point.
This came with reduced output of condos in Bangkok of over 32% in 2019 based on lower demand and prudent management by developers.
During 2020, there have been reports of lower prices on some condominium units in less strategic locations and of a smaller size, with luxury condominium prices holding their own.
In 2019, large firms, active in the market, had cut back construction. This action is now helping to prevent a free fall in condo prices which are being challenged with the absence of foreign buyers.
Ms Risinee estimated that, before the closure of the country, foreign buyers in the market represented 20 to 30% of sales while natural, local demand for condos as housing remained at 70%.
Economic situation is deteriorating and this may well impact condominium prices further
This market is holding up as some banks, with government support, continue to make loan facilities available. However, this could be thrown into doubt if the unemployment situation worsens or income levels are further eroded.
GSB Bank recently curtailed its loan advances for condominium units in Samut Prakan province, adjacent to Bangkok, after it estimated a 36% drop in condominium prices in the second quarter of the year.
This could mean that the economic malaise caused by the country’s post-pandemic situation is worsening and extending further into the property sector.
Chinese condo buyers unable to visit Bangkok
In the meantime, Dr Apha has indicated that most of the missing condo buyers were Chinese investors who because of the border closure and the pandemic situation, have been unable to visit Thailand.
She also explained that the market for condominiums in Bangkok right now has been severely impacted by this enforced absence of foreign buyers with 98% of them unable to enter the kingdom since the restriction of commercial flights into Thailand which are currently limited to government-approved repatriation efforts.
Dr Apha also appeared to suggest that Chinese buyers from both the mainland and Hong Kong had been left unable to meet their stage payments on the contracts already put in place.
It is understood that many had become accustomed to travelling to Thailand in person to make stage payments.
Foreign Investors market for condos off the table
Dr Apha, who is a director of Richy Place Public Company Limited in Bangkok, a highly successful property development concern, estimated that the future for the condominium market in Bangkok was now dependent on domestic buyers seeking units for living purposes.
She predicted that the market would take years to fully recover.
Chinese man in 2019 with a bag of cash to purchase a Pattaya condominium lost track of it
A story from last year illustrates the pattern.
In June 2019, a Chinese man with the assistance of local radio station JS 100 was fortunate to be able to successfully recoup ฿2.8 million in cash contained in a plastic bag which he had left in a taxi.
It appears that the taxi driver in question went out of his way to keep the money until finally being tracked down by intrepid police working with the help of CCTV footage and the public.
The money was recovered and returned to its owner. Although the Chinese man revealed that ฿ 35,000 had been spent by the taxi thief, he declined to press charges against the man.
Neither the Chinese man nor his partner was identified by the police except to reveal that the couple had brought the money to Thailand to buy an apartment in Pattaya.
As Thailand closed its borders in April this year, with millions of tourists left stranded within the kingdom, it is estimated that at least 100,000 of these people were Chinese nationals on tourist visas who declined to return home.