The recent restrictive measures from the Bank of Thailand (BOT) have continued to cast a shadow over Bangkok’s condominium market since the beginning of this year.
Condominium sales have dropped, putting pressure on developer’s financial targets. Some developers have sought to diversify their risk in pure residential development projects for sale by seeking to develop alternative sources of revenue from recurring income properties.
Growing concerns about excessive residential mortgage lending by commercial banks prompted the BOT to reduce loan-to-value ratios (LTV ratios) for second and subsequent home mortgages starting from 1st April 2019. CBRE believes the new measures have significantly reduced the number of speculative buyers and buy-to-rent investors of residential condominium units.
A slowdown in the condominium market has encouraged major residential developers to consider diversifying their portfolios into other property sectors such as office, hotel, and serviced apartments.
Most of these companies are listed on the Stock Exchange of Thailand and their financial performance is regularly accessed. With stable recurring income, they are better able to offset the volatility in revenues from the residential-for-sale market as well as sustain revenue and profit growth.
“We have seen an increase in both the number of landowners willing to lease land for the long term and the number of developers who are looking to develop leasehold land projects,”
Ms. Kulwadee Sawangsri, Executive Director and Head of Capital Markets – Investment & Land, CBRE Thailand.
“Over the last 4 years, CBRE has completed nine long lease land transactions worth more than THB 10 billion. With the forthcoming changes in the new Land and Building Tax…
