During the severe COVID-19 pandemic Most housing developers decide to postpone the opening of new projects. and using promotional strategies to release inventories to maintain cash flow during a crisis As a result, the situation of the accumulated unsold residential units in the past has been relieved accordingly. This can be seen from the situation of accumulated unsold units in Bangkok and its vicinity that have declined in 2021 with a -7% YOY decline.

However, when the epidemic situation of COVID-19 began to improve and entrepreneurs began to launch more projects. While demand is still slowly recovering, the number of unsold properties will begin to increase at the end of 2022, returning to the same level as before the COVID-19 outbreak.

When the current accumulated housing situation has not eased as expected And in what direction will it be in the future?

SCB EIC views that in 2023, the accumulated unsold housing units in Bangkok and its vicinity will continue to increase. from the previous year around +4% to +6% YOY due to new supply which is expected to continue to be at a high level. and still higher than the recovery in demand

However, if classified by housing type It is expected that the accumulated unsold units in the condominium group will increase from the previous year. from entrepreneurs returning to launch more projects This is in line with the behavior of residential buyers who return to focus on location and convenience of traveling during the COVID-19 period, which emphasizes the importance of sufficient usable space. This resulted in turning more interested in buying low-rise housing. But nowadays, residential buyers are more interested in buying condominiums.

However, according to the results of the Residential Real Estate Survey conducted by SCB EIC in March 2023, it was found that nowadays, residential buyers pay more attention to price factors. and the location that is most convenient for life representing 44% and 41% of respondents, respectively. Which is more than the factor of usable space size Makes condominiums come back to meet the needs of living better than low-rise housing.

This can be reflected in the absorption rate in 2022, which was around 40% from the COVID-19 period, which was only around 25%, while the accumulated unsold units increased by only +0.4% YOY, especially condominiums with a low price of no more than 3 million baht. that has continued to be popular from the purchasing power situation in the country which is still recovering

As for the situation in the townhouse group Especially those priced no more than 3 million baht, which account for more than 70-75% of the market, are still faced with direct competition from low-priced condominiums. causing the accumulated number of unsold units to continue to increase As for the accumulated unsold units in the group of detached houses and twin houses, there is a tendency to increase at a lower rate from the previous year. which increased as high as +8% YOY as most developers turned their attention to high-priced projects. with a small number of units per project While many mid-priced projects are still not sold out. Therefore, the opening of new projects may not increase much.

For the medium term (2024-2026), SCB EIC sees that the accumulated unsold units will tend to increase. and may be at a level of greater concern This is because it is due to transfer ownership of condominiums that have been bought in large numbers 1-2 years ago.

Especially in the low-priced condominium group. Most of the buyers are the middle-lower income group. which is financially fragile And there is a risk of being denied credit more than other buyers, which has the opportunity to cause the accumulated condominium units to increase rapidly.

As for the townhouse group, it is expected that there will still be problems in draining the accumulated unsold units. from demand that is expected to not return as expected As a result, new project launches tend to slow down as well.

While the accumulated unsold units in the group of detached houses and twin houses are expected to continue to increase. but at a reduced rate from the purchasing power of middle-income groups that are consistently available However, it is expected that the competition situation in the group of single detached houses and twin houses will tend to be more intense in the next phase. Because it has received interest from entrepreneurs because it is a market that is less affected by the economy than other groups.

How should housing development developers prepare themselves for the situation of the accumulated unsold housing that is increasing?

SCB EIC views that monitoring the situation of each type of accumulated unsold units in different locations will help operators to predict risks. and better competitive conditions in the market In addition, it may also see opportunities that will arise in each type of housing market as well.

However, in the future The housing market tends to change rapidly. according to changes in the behavior of residential buyers together with the tendency of construction costs to increase As a result, it is not always possible to use a promotion strategy to release inventories. Therefore, developers need to be flexible in adjusting their residential project development strategies. Portfolio is organized. by appropriately diversifying the development of each type of housing project Including expanding into new businesses or businesses related to housing to create synergy that will help strengthen the stability of the housing development business in the future.

Source:https://www.prachachat.net/columns/news-1343529

Date 10/07/2023