Terra Media Reports New Condos for Sale Have Decreased by 3.5%, Averaging 87,000 Baht per Square Meter; If the Economy Doesn't Recover, Prices in Thonglor-Ekkamai Could Drop to 180,000-200,000 Baht per Square Meter, Presenting a Golden Opportunity for Buyers

Ms. Sumitra Wongphakdee is the Managing Director of Terra Media and Consulting Co., Ltd., a marketplace and real estate content provider. She stated that the COVID-19 situation has significantly impacted consumer sentiment and purchasing power, leading to an 83% decrease in new condominium launches in Bangkok and its vicinity during the first six months of this year, as developers are more cautious about investments. The condo market has been signaling a downward trend since 2018 due to reduced purchasing power from Chinese buyers, affected by a stronger Thai Baht and a weaker Yuan. This was further exacerbated by the Bank of Thailand's loan-to-value (LTV) measures.

The ongoing negative factors have forced real estate developers to adapt to changes for survival. Currently, new condos launched in 2020 across Bangkok and its vicinity have an average selling price of 87,000 Baht per square meter, down 3.5% from 2019's average of 89,500 Baht per square meter, and down 10% compared to 2018's average of 96,000 Baht per square meter. Additionally, the number of new project launches in 2020 has decreased by 83%.

Currently, high-demand condos in Bangkok are located in the prime Thonglor-Ekkamai area, where foreign buyers hold over 25% of the units. However, the COVID-19 situation has caused selling prices to drop to 220,000-250,000 Baht per square meter. It is anticipated that in 2021-2022, if the Thai economy does not improve, we may see selling prices in this area drop to 180,000-200,000 Baht per square meter to clear stock and maintain cash flow. This presents a golden opportunity for condo buyers at a price point that returns to pre-sale levels, making it a worthwhile long-term investment and a good option for living, as it is in a prime location where land for development is scarce and prices are consistently rising.

Looking ahead to the real estate business trend until the end of 2021, developers will need to adjust their plans for new projects, focusing on creating new standards for living. Areas with land costs that can be developed into horizontal projects will need to shift their products to horizontal developments to accommodate remote working. Meanwhile, areas with high land costs may need to delay projects.

"The COVID-19 pandemic has changed residential buying behavior, whether it be condos or houses, in terms of choosing locations that better meet family living needs. Consumers are now more aware and have experienced working from home, leading them to want to maintain distance in shared spaces. Therefore, the previous selling points of shared areas like co-working spaces and co-kitchen spaces may no longer attract interest as they once did.

Another important factor is the "purchasing power" of consumers, which is continuously declining, affecting income, employment, and the assessment of buyers' repayment capabilities. Most banks are now evaluating customers' purchasing abilities to be 10-20% lower than before due to economic instability or predictions of a prolonged economic downturn.

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