LPN Wisdom predicts that in 2020, the launch of new condominiums will decrease by 23%, while the launch of horizontal housing is expected to increase by 9%. This will result in a total decrease of 10% in new project launches for the year compared to 2019.

Mr. Prabhan Sak Raksaiwan, Managing Director of LPN Wisdom and Solutions Co., Ltd. (LPN Wisdom), a real estate research and development company under the L.P.N. Development Group, stated that real estate developers are likely to delay their plans for launching condominium projects in 2020 due to a surplus of unsold units at the end of 2019, which stood at 214,000 units, a 10% increase from 195,000 units in 2018. This surplus will require at least 24 months to sell, leading developers to postpone their condominium project launches in 2020 compared to 2019.

“We expect that in 2020, approximately 50,000-55,000 condominium units will be launched in Bangkok and its vicinity, or about 110-120 projects, focusing on the market segment priced below 5 million baht per unit. The sales ratio is expected to be around 30% of the total new launches, or about 15,000 units, which represents a continuous decline from the 33% average sales rate in 2019. This is due to stricter lending policies from financial institutions as mandated by the Bank of Thailand regarding the Debt Service Ratio, as well as a decrease in purchasing power both domestically and internationally due to the global economic slowdown and the country's economic deceleration,” Mr. Prabhan stated.

However, real estate developers plan to launch horizontal housing projects, including single houses, townhouses, and duplexes, in Bangkok and its vicinity in 2020, with an estimated 50,000-55,000 units or about 280-300 phases/projects, at a price range of approximately 3-5 million baht. This represents a 9% increase compared to 2019, which saw a total of 259 phases/projects launched, amounting to 45,959 units. It is estimated that the sales volume for new launches in 2020 will be around 24% of the total new sales.

“Developers are increasingly launching horizontal projects to meet the rising demand in the market and to manage operational costs, as horizontal projects can be constructed according to market purchasing power without the need to build the entire project at once. This allows developers to manage costs in line with market demand,” Mr. Prabhan added.

Given this trend, the total number of new residential project launches in Bangkok and its vicinity in 2020 is expected to be between 100,000-110,000 units, a decrease of about 10%, with a total value of approximately 420 billion baht compared to 2019, which had 110,500 new project launches valued at 440 billion baht, representing an 8% decrease from 2018.

Meanwhile, the estimated transfer of ownership in 2020 is expected to be similar to 2019, with a total of 196,000 units transferred, reflecting a 6% decrease from 2018.

Locations of interest for new project launches in 2020 remain along the subway lines, particularly in areas with new lines and extensions where land prices are still relatively low. The three main locations include the extension of the Blue Line from Bang O to Bang Khun Non, along Charan Sanitwong Road, which will be operational in 2020 for condominiums priced below 2 million baht; the Yellow Line, set to open in 2021; and the Orange Line, expected to commence service in 2023, covering the stations from Chalong Ratch to Lam Salee to Pradit Manutham (Lat Phrao-Ramkhamhaeng) for condominiums priced below 2 million baht and duplexes/single houses priced between 5-10 million baht, as well as the Bang Wa station and Kanlapaphruek Road for residential projects priced between 2-5 million baht.

“The real estate market in 2020 is impacted by both domestic and international factors, particularly the purchasing power from Chinese investors, which has been affected by the COVID-19 virus, leading to a decrease in purchasing power from this market. Developers who have sold condominiums to Chinese investors since 2018 and are set to transfer ownership in 2020 of no less than 14,000 units may not be able to complete all transfers to customers. This has forced real estate developers to adjust their business strategies to align with market changes, shifting towards developing horizontal projects or smaller condominium projects to manage costs, as well as managing financial liquidity by accelerating the sale of unsold inventory and increasing rental income to balance revenues amid a slowdown in the real estate business,” Mr. Prabhan concluded.