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The launch of new Real Estate Projects in the first half of 2021
AREA Press Release No. 583/2021: August 13, 2021

Dr.Sopon Pornchokchai, Ph.D. Dip.FIABCI, MRICS
President, Agency for Real Estate Affairs (AREA)

The property market in Bangkok Metropolitan Region (BMR) shrinks as an effect of Covid-19 pandemic. Results in a low number of new properties launched at 25,406 units, worth 138,672 million Baht in the first half of 2021. 99% of these properties are in a residential sector, with small portions of commercial and industrial sectors. In terms of the residential sector, the number of new projects and units launched fell while the average price grew. In 2021, the residential sector is expected to shrink by 30% compared to 2020, although it might unfold in 2022. Nevertheless, this situation is not as severe as the Tom Yum Kung crisis in 1997 – 2002.

 

Agency for Real Estate Affairs Co., Ltd., the largest real estate information center in Thailand (www.area.co.th), has surveyed the launch of new real estate projects in the first half of 2021. This information is crucial for an analysis of current and future property markets trends. Dr.Sopon Pornchokchai, President of, Agency for Real Estate Affairs, intends to share this information to benefit the public and the private sectors.

 

For the first half of 2021, there are 131 new projects and 25,406 units. Most of them (99.4%) are in the residential sector which is worth 138,672 million Baht. Only 1.9% or 149 units of these new projects are from other sectors which are worth 2,660 million Baht, such as mini-factory, warehouse, mini-office, and other products which are related to commercial and industrial sectors. It indicates that other sectors despite the residential sector are quite static. 

 

Dr. Spoon Pornchokchai reveals that 39% of the 25,257 new residential units, or approximately 9,959 units are condominiums which have the highest market share among the residential sectors. However, this portion is small when compared to previous years which condominiums made 50-60% of new inventory in the residential sector.

 

Townhouse has the second-highest share in the residential sector which is around 37% or approximately 9,211 units. Detached houses made 12% of the new residential market share or approximately 3,001 units. It is rather intriguing that semi-detached houses share 11% of the residential sector or approximately 2,870 units, which are close to the share of detached houses. Other products are shophouses, commercial buildings, and allocated land. Nonetheless, the average price of the new residential unit is 5.385 million Baht.

In terms of price segmentation, the detached house is dominated by the 5-10 million Baht segment (1,152 units) and the 3-5 million Baht segment (1,151 units), which is similar to the semi-detached house segmentation. The townhouse is dominated by the 2-3 million Baht segment (3,804 units), followed by the 3-5 million Baht segment. The condominium is also dominated by the 2-3 million Baht segment (2,745 units), followed by the 1-2 million Baht segment (2,239 units)

 

The market value of new projects launched in the first half of 2021 is approximately 136,012 million Baht which comprises of condominiums (43%), detached houses (25%), townhouses (19%), semi-detached houses (12%), shophouse (1.1%) and allocated land (0.2%). The average price of a detached house is 11.197 million Baht/unit, a semi-detached house is 5.681 million Baht/unit, a townhouse is 2.863 million Baht/unit, a Shophouse is 7.934 million Baht/unit, and a condominium is 5.818 million Baht/unit. Although there are only 622 units of residential projects, which is higher than 20 million Baht/unit, it has the highest share of 36,474 million Baht or around 27% of the total market value of a new project launch in the first half of this year.

 

From an analysis of a survey in the first half of 2021, Dr. Sopon Pornchokchai forecasted 50,514 new units launched with a market value of 272,026 million Baht in 2021. The number of newly launched units drops by 30.8%, compared to 2020, while the market value only decreased by 5.3%. Due to a trend to launch high price products in 2021, the market value in 2021 remains close to 2020. Yet, the number of the newly launched unit has dropped significantly. It is less than half of the number in 2008 and 2009, reflecting a significant and continuous shrink in the residential market.

 

One significant piece of information from a launch of new projects in the first half of 2021, reveals that Magnolia Quality Development Corporation Limited (MQDC) has launched 6 projects with 1,742 units which make only 7% from the overall newly launched units. However, it is worth 45,326 million Baht or around 32% of the market value, which means one-third of the market value. If we exclude these projects, there will be 23,515 newly launched units with only 93,346 million baht in terms of market value.

 

If we assume that the overall market value of the new projects launched in 2021 is around 200,000 million Baht (approximately double of a market value in the first half of 2021, 93,346 million baht). The market value in 2021 will drop by 30%, compared to the value of new projects launch in 2020, which is 287,261 million Baht. Thus, the number of newly launched units and market value has significantly decreased.

 

Many people might worry that the residential market in the BMR might face a worse recession than the Tom Yum Kung crisis in 1997 – 2002. However, the situation is much better. Since the covid-19 outbreak, the residential market shrank from 118,975 units in 2009 to 73,043 in 2020, and it might drop to 50,514 in 2021. Nonetheless, there are rarely any new projects launched during the Tom Yum Kung crisis, especially around 1998-1999. After all, the economy is expected to rise again in 2022 or within 2023, despite any incidents. Thus, the number of new residential inventory should grow in 2022 and 2023.

 

Note:

This article was translated in English by Miss Namthip Pornchokchai, Managing Director, www.feasyonline.com