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Bangkok's condo oversupply-crisis is worsening after a 7.7 magnitude earthquake in Myanmar, which killed 2,700 people and damaged 13,000 buildings in Thailand, including a collapsed office-tower. The quake has shaken buyer confidence, especially in high-rises, worsening unsold inventory, which hit 235,000 units in 2023. Condo sales fell 37% in 2024 despite government incentives. Developers like Ananda and Origin face rising inspection-costs, while firms like Sansiri assure safety. Analysts predict a short-term demand drop but expect recovery, as no fatal condo collapses occurred. The property index has declined 32% in a year, reflecting the sector's ongoing struggles.
The ongoing condominium oversupply in Bangkok is expected to deteriorate further following a powerful earthquake in Myanmar that caused significant structural damage in Thailand's capital. The 7.7 magnitude quake, the most severe to hit Myanmar in a century, resulted in over 2,700 fatalities and extensive destruction. In Bangkok, an under-construction office tower collapsed, and approximately 13,000 buildings sustained varying degrees of damage, prompting widespread evacuations and safety assessments. Advertisement
This disaster has instilled fear among prospective property buyers, particularly those considering condominiums. Real estate analysts, including Colliers Thailand, warn that the already sluggish condo market will face additional challenges as demand weakens in the coming months. The industry was already struggling with an excessive inventory of unsold units, which stood at 235,000 by the end of 2023-the highest recorded since 2018. Furthermore, condominium sales declined sharply by 37% in 2024, dropping to approximately 53,000 units, according to the Thai Condominium Association.
Buyers have become increasingly hesitant about high-rise buildings, particularly newer developments, as concerns over structural safety mount. "We've observed a temporary slowdown in condo searches," noted Pierre Lung, sales director at PropertyScout. The reluctance to invest in vertical housing is expected to worsen the supply-demand imbalance in the market.
Thailand's real estate sector has been struggling since the COVID-19 pandemic, with government incentives and tax relief measures failing to stimulate substantial recovery. In an effort to boost property sales, the Bank of Thailand recently eased loan-to-value regulations to encourage lending, but high household debt levels continue to pose a significant barrier. Now, the added uncertainty caused by the earthquake threatens to further dampen consumer confidence.
Kiatnakin Phatra Securities projects that the negative impact on condo demand will persist for three to six months. Developers with heavy reliance on high-rise projects, such as Ananda Development Pcl and Origin Property Pcl, are likely to face increased costs due to heightened inspections and necessary repairs. In contrast, firms that focus on landed housing may benefit as buyers shift their preferences towards low-rise residences perceived as safer.
To counteract growing fears, leading property developers like Sansiri Pcl have launched aggressive public relations campaigns to reassure buyers. Sansiri's CEO, Uthai Uthaisangsuk, announced in a video statement that over half of the company's 250 residential projects had been inspected, with no major structural issues identified. Other developers have echoed similar commitments to safety, emphasizing the integrity of their constructions.
Despite initial anxiety caused by visible cracks and falling materials in some high-rises, industry experts believe the long-term impact will be minimal. The Thai Condominium Association argues that the absence of fatalities due to condominium collapses should restore confidence in building standards.
Nevertheless, the stock market has reflected investor concerns. Property developers' shares dropped 3.1% on Monday, though they partially rebounded the following day. Over the past year, the real estate index has plummeted by 32%, significantly outpacing the 15% decline in Thailand's benchmark SET index.
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