Failure rate for Bangkok condos nears 50%

Tuesday, June 10, 2008
Failure rate for Bangkok condos nears 50%

BANGKOK (The Nation): The chance of failure for condominium developers in Bangkok has grown to almost 50 per cent as competition heats up amid a glut of fresh supplies, warned Aquarius chief executive Yongyuth Chaipromprasert.

After conducting a study over the past five months, the building consultant said even the inner Sukhumvit area, once deemed immune to downturns, "no longer guarantees success".

"The average take-up rate for Bangkok condominiums is now 54 per cent," he said. "That is considerably lower than about 70 per cent for last year."

"Of the 50,000 units that are expected to be launched this year, about 46 per cent won't be sold," he deduced from recent statistics. "One out of every two developments could fail."

"The inventory left over from last year should also add to current stock, making the situation even tougher for sellers, especially newcomers," he said.

With 15,000 unsold units from last year and 25,000 units from this year, the market will have an additional 40,000 units to clear in 2009.

Because of the worrying trend, he expected new supplies to fall to 40,000 units next year. Yesterday TCC Land said it was halving the number of new projects from 5 to about 2.

Yongyuth said most of the current buyers are in the outer zones of Bangkok where land is cheaper. "If developers can sell units for 1 or 2 million baht, they should survive. It is the large units which face difficulty with rising inflation and oil prices," he said.

Supharat Development managing director Sumet Sukapanpotharam agrees. "Even with the government incentives to boost home sales by suspending the sales and purchase tax, the developers who will benefit are those who have completed projects and can transfer the units within the year."

"We are building for urban workers with limited spending power. There's no point selling expensive units when purchasing power has fallen," said Ananda CEO Chanond Ruangkritya.

Ananda's Ideo Mix near Sukhumvit 103 is commanding sales as the units are priced from 1.5 million baht.

Yongyuth said the worst hit would be developers who bought land recently at high prices and were forced to construct at escalated costs.

I took notice this trip of the many building projects in Bangkok. Cranes all over the skyline. I was mentally comparing it to my first visit in 2001 when there were no cranes visible and a large number of abandoned "skeleton" skyscrapers from the '97 bust. The whole scene is starting to look "toppy".

There's still a "skeleton" building you can see to the south of Taksin BTS station that looks like a twin of the Empire Tower. It's been abandoned ever since I first visited. An object lesson in buying condo's on spec before the building is completed.

you can't use property developers success or woes as a judge of the general economy.

I agree BUT
when you factor in rise in fuel costs, rise in food prices, political uncertainty, world wide economic downturn, lack of credit resources, predicted inflation, gloom, lack of tourists etc you don't have to be a genius to see that there are problems ahead.

As I remember it thyere were about 350 abandoned sky rises on the Bangkok skyline soon after the 2006 financial crisis. These projects are now have/been are being 'finished off' (at the heights that they srtopped building at). The market is glutted with space partly from these, including condos I am sure). It might be that a new set are right behind?

I have heard that one former poster on this forum is now involved in real estate speculation.. Of course, he will speculate
with your money, if you believe in miracles.. He could be correct thou, as even a broken clock is correct twice a day... :idea:
Is the tallest condo tower in the known universe and yet to be built fair game to discuss now? Has anyone here bought
one except for real world famous celebrities? :cat:

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Originally Posted by catawampuscat

" ... Is the tallest condo tower in the known universe and yet to be built fair game to discuss now? ... "

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No. jinks will immediately lock any thread which includes a single negative word in the direction of The Tower. Think of it as kind of a 'Lese Majesty' rule regarding, not a person, but a concrete edifice.

Cheers ...

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Originally Posted by ArNolD

As I remember it thyere were about 350 abandoned sky rises on the Bangkok skyline soon after the 2006 financial crisis.

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There was a financial crisis in 2006?

Quote:

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Originally Posted by ArNolD

As I remember it thyere were about 350 abandoned sky rises on the Bangkok skyline soon after the 2006 financial crisis. These projects are now have/been are being 'finished off' (at the heights that they srtopped building at). The market is glutted with space partly from these, including condos I am sure). It might be that a new set are right behind?

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Coincidentally there was an article on this subject titled City of Ghosts in the May issue of Geographical, a magazine generally respected as it is the journal of the Royal Geographical Society and the Institute of British Geographers, which contained the following:

Bangkok's 'ghost towers are remnants of the 1997 Asian economic crisis ..... more than 500 half-finished high-rise developments were left to rot in the tropical heat .....the Sahavinya (SV) City tower complex sits on the banks of the Chao Phraya River in Bangkok in what was planned as an important new business district for the city. Now, the exposed steel structures of their upper storeys have begun to rust, leaving the towers dangerously unstable. However, before they can be demolished, difficult questions of ownership and liability need to be addressed.

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Originally Posted by Mr. Quisp

Quote:

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Originally Posted by ArNolD

As I remember it thyere were about 350 abandoned sky rises on the Bangkok skyline soon after the 2006 financial crisis.

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There was a financial crisis in 2006?

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Oooooooooooooooohhhhhhh look who's already correcting spelling errors, all of a sudden, so early in his career. Let's put him into management! Quickly.

Yup I meant to type 1996 and I should have typed 1997. Those ICE's at DJ (ouch!). 2006 was, of course, the year of the most recent coup.