Pandemic fallout all but assures another year of shrinkage for host provinces
With the virus staggering global and domestic economies, the residential market in Chon Buri, Rayong and Chachoengsao will shrink again this year after a recovery in 2019, according to the Real Estate Information Center (REIC).
Vichai Viratkapan, acting director-general, said in the base case scenario, the market will drop by 11.9% in residential transfers to 44,657 units and 21.5% to 78.4 billion baht in transfer value.
The base case is the most likely scenario according to the forecast operating under an economic contraction of 5.3% — as predicted by the Bank of Thailand — with a minimum retail rate of 6.08% and the existing inflation rate.
“The plummet in three key eastern provinces this year, both in demand and supply, is in line with the impact from the pandemic and droughts,” he said.
REIC forecasts the number of residential construction permits in the three Eastern Economic Corridor (EEC) provinces will decline by 15.3% to 35,166 units in 2020.
The biggest drop is for condos, from 11,649 units in 2019 to 6,557 units this year, a dip of 43.7% after rising more than 2.5 times from 4,631 units in 2018 to 11,649 units last year.
The decrease in condos is higher than for low-rise houses as condo buyers typically represent real demand as well as investors, foreigners and those buying as a second home. Most of these buyers delay purchases when the economy is unfavourable.
Low-rise construction permit will drop only 4.1% in 2020 as most of low-rise buyers are real demand.
According to data compiled by REIC, a number of residential transfer in EEC provinces resumed in 2018-19 to more than 50,000 units per year. Earlier, EEC provinces faced two consecutive years of decline to 44,672 and 41,050 in 2016-17, decreasing from 57,660 units in 2015.
Value of residential transfers in 2016-17 saw the same downward trend. In 2019, transfer values grew by 5.9% against a marginal drop of 0.3% in number of units as an average price was higher, said Mr Vichai.
“Last year, Sattahip district attracted new condo supply as it is an area the government designated to be an aerotropolis under the EEC,” he said.
The number of land allocation permits will shrink by 17.8% to 17,938 units from 21,814 units in 2019 which rose 22.6% from 17,800 units in 2018. The five-year average during 2015-19 was 22,400 units.
Last year, the number of land allocation permits in the EEC provinces totalled 175 projects with 21,814 units that rose 2.9% and 22.6%, respectively.
The largest portion was for townhouses with 14,066 units, making up 64.5%, followed by single detached houses with 3,978 units (18.2%), duplex houses with 3,461 units (15.9%) and shophouses 218 units (1%).
By provinces, Rayong recorded the highest number of land allocation permits at 44.5% for the three provinces. Most of them were in Pluak Daeng, Nikhom Pattana and Muang districts.
Chon Buri came in second with 44.4%, mostly in Sri Racha, Muang and Phan Thong districts.
In Chachoengsao, which represented 11.1% of permits, popular locations are in Bang Pakong, Muang and Plaeng Yao districts.
Last year, the number of residential construction permits rose 35% from 2018, with condos recording the highest increase of 152%.
By province, Chon Buri saw a spike in residential construction permit with 26,527 units, accounting for 64% of the total, comprising 17,803 low-rise units and 8,724 condos. Most of them were in Si Racha, Muang and Sattahip districts.
In Rayong, the number of residential construction permit last year totalled 10,378 units or representing 25% which consisted of 7,480 low-rise units and 2,898 condo units.
High-density locations were Muang, Pluak Daeng and Klaeng districts.
In Chachoengsao, popular locations for residential construction permit were Muang, Plaeng Yao and Phanom Sarakham districts. The number of permit totalled 4,590 units comprising 4,562 low-rise units and 28 condo units.
Chon Buri also saw the largest number of residential transfers and the highest residential value last year with 21,888 units worth a combined 45 billion baht.
Top three locations were Sri Racha, Bang Lamung and Muang districts.
In Rayong, the number of residential transfer totalled 10,967 units worth a combined 17.4 billion baht. Most of them were in Muang, Pluak Daeng and Ban Chang districts.
Chachoengsao recorded 3,863 units in residential transfers worth 6.92 billion baht. The majority were in Muang, Bang Pakong and Ban Pho districts.
Chon Buri saw the highest number of condo transfers with 12,705 units worth 29 billion baht, followed by Rayong with 711 units worth 963 million baht, and 541 units worth 530 million baht in Chachoengsao.
Source : BangkokPost website, 17 April 2020 by Kanana Katharangsiporn
