It is a paradox.  While housing markets as a whole is shrinking, low-priced and high-priced condominiums would have a bubble.

Dr.Sopon Pornchokchai, President, Agency for Real Estate Affairs is expecting that by the end of 2015, condominiums would be launched for 74,440 units which would be some 14% more than the total launching of 65,298 units in 2014. The reason for the gigantic increases in condominium units is simply due to the fact that other types of housing units could not be sold in the market.  Condominiums are a major type of properties where capital gain and rent could be materialized substantially.

Newly Launched Condominiums Units in Bangkok By Price Range

However, there is a worry that there might be some upcoming oversupplies in the markets. For example, in the sector of condominium units priced at Baht 1 million and below, 18,876 units are expected to be launched by the end of 2015. This is some 92% increase in terms of units or Baht 17.085 billion in value (94% increase). For these low-priced condominium units, it is targeted to lower-income households. However, during this economic difficulties, not many of them would be absorbed. Some speculators are expected to buy those units too. However, this might be a very short-term investment.

Also very recently, the Prime Minister of Thailand said he would build rental and owner- occupied apartments at a price of Baht 300,000 per unit or at a rent of Baht 1,000-2,000 per month along the mass transit systems in Bangkok to help the poor out of poverty and cost of transportation.  This is not a good idea at all.  There exists a glut in this sector.  The more promising sector is the higher-priced housing units.

Nowadays, there are still tens of thousand of low-priced housing units of the National Housing Authority.  Around some 300,000 units of vacant housing are still available in the markets or on the hands of banks and other financial institutions as well as at many asset management companies and the Legal Execution Department.

Another sector centred on condominiums priced at Baht 20 million and over. Last year, some 337 units were launched at a total value of Baht 9.347 billion.  However, there might be some 2,318 units launched in 2015. This would be Baht 83.382 billion in value.  This is some 588% increase in units and 792% increase in value.  Although these are involved with

a large amount of investment, the number of the developments are still small. There are a few projects launched by private developers who might not have intensive investment experience; however, most of the developers in this sector are very experienced ones. The expected oversupply should be more manageable and will not become a disaster to the market as a whole.

As a result, the government policies to encourage the sales of lower priced housing units or the first-time home buyers might be ineffective to help boost the economy.  It would be to help accelerate and secure the sales of housing developers.  To help the pulbic, voluntary escrow account should be abandoned and replaced by a compulsory one.  This would help build confidence to the market resulting in the higher speed of housing transaction in the market which would be a win-win situation for both developers and consumers.

Agency for Real Estate Affairs (AREA)

AREA is Thailand's largest real estate information and valuation centre servicing nationwide, the ASEAN Region and worldwide specializing in international standard valuation, survey, research and information services while refraining from real estate brokerage and self interest property development to avert a potential conflict of interest, thereby ensuring the integrity of our valuation and research work.  AREA is the first and only ISO 9001-2008 certified property consultant firm in Thailand. We earn 2011-15 Prime Minister's award on Labour Relation, 2011 Integrity Award of the National Anti-Corruption Commission, 2009 Good Governance Cert., the SMEs Institute, 2007 Sufficiency Economy Award, Royal Development Project Board and 2005 Prime Minister's Award on Ethics.

Sopon Pornchokchai, PhD D.FIABCI CRS MRICS

Dr.Pornchockchai is an experienced valuer and lecturer on valuation in Thailand and abroad. He was a consultant to the ESCAP, UN-Habitat, World Bank and the like.  He gained a Ph.D. in land and housing from AIT and had further studies from LRTI-Lincoln Institute of Land Policy and Katholieke Universeit Leuven (Belgium).  He is also the IAAO representative to Thailand and advisor to the Appraisal Foundation (USA).  His research master pieces include the construction of CAMA modeling (1990), forecast of 300,000 unoccupied housing units (1995 and 1998), study for property information centre (2000), roadmap for valuation profession (Ministry of Finance Vietnam, 2006), consultancy services to Ministry of Finance, Indonesia (2008), World Bank (2010), UN Habitat (Vietnam) (2013).