Property & Real Estate
Uncertainty looms over Bangkok homes market U
ncertainty is casting a shadow over the Bangkok residential property market, according to CBRE. Although developers have recently increased their launches of condominiums, sales to Thai buyers have slowed in some locations and are likely to slow further with the imminent imposition of tighter mortgage lending by the Bank of Thailand
Some developers are trying to find locations where there is real demand from Thai end-users and develop projects that buyers can afford. Others have increased their reliance on foreign sales where there is uncertainty as to who will be the final occupier. The downtown expatriate rental market is stable, but CBRE experts believe that the local rental market in the midtown/suburban areas is quite flat, so buy-to-rent investors may not achieve the yields they were expecting. The Bank of Thailand has recently imposed tighter regulations on mortgage lending by reducing loan to values (LTV) for certain categories of purchasers in an effort to curb mortgage and property market risks and improve housing loan quality. Effective from 1 April next year these new measures will favour first home buyers with genuine demand as opposed to buy-to-rent investors with multiple outstanding mortgages that are searching for yield. Although the new regulations will not force developers to collect minimum down payments at contract signing, it will encourage them to collect higher down payments to reduce the risk of loan defaults upon transfer. This will reduce the demand from speculative buyers as they will be required to pay up to 30 percent as a down payment – compared to today’s 10-15 percent. These measures, according to CBRE, will cool down and stabilise the overall market situation. As domes18
The Link
Issue 4/2018
Aliwassa Pathnadabutr - CBRE Thailand
tic demand is expected to shrink as a result of the new mortgage restrictions, CBRE anticipates a domino effect where developers will further shift their reliance towards foreign buyers, who purchase primarily with their own funds, as all the money must come in from overseas as foreign currency to comply with the foreign condominium ownership regulations.
