Thai developers are offering huge discounts and throwing in freebies like hotel stays and even waiving off transfer fees as part of a campaign to drum up sales that have taken a hit from the Covid-19-induced recession.
“We have had a total of four campaigns so far in 2020 to stimulate buying demand,” said Charinya Youngprapakorn, head of advisory and transaction services for residential project marketing at CBRE Thailand.
She added that there was a surplus supply in some parts of the Thai capital as foreign demand had dropped since last year, while demand from local buyers had been affected by the economic uncertainty triggered by the pandemic and escalating social unrest.
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Bangkok’s housing market has been struggling even before the pandemic hit early this year. Inventory of both flats and landed houses had increased from over 138,000 units in 2015 to about 176,000 at the end of 2019, according to Savills Thailand. At the end of the first-half, the level stood at about 147,000 units.
One company is offering discounts of more than 10 per cent or some 11 million baht (US$352,000) for its most expensive property. Others are offering gift vouchers that can be redeemed for hotel stays and dining at restaurants, and even free transfer fees. The promotions, launched by developers of 12 housing projects, run until November 30.
The marketing campaign is an extension of the promotions in the second quarter. Then, several developers had offered to pay finance instalments for up to three years, while others enticed buyers with Honda and Porsche cars with the purchase of luxury property.
Companies like Ananda Development have said they hope to attract more overseas buyers, including those from Hong Kong and China, without the need to travel to Bangkok. Thailand is a popular investment destination for the Chinese as unlike other jurisdictions, foreigners pay the same fees and surcharges as local buyers.
Bangkok-listed Ananda claims that foreigners typically make up 25 per cent to 30 per cent of total sales, with mainland Chinese and Hongkongers its two biggest overseas buyers.
“Once the pandemic took hold, developers began placing large discounts, in some cases up to 50 per cent in order to reduce the amount of unsold stock they had on hand,” said Jeremy O’Sullivan, head of research and consultancy at Savills Thailand. “Areas popular with international buyers have seen a sharp reduction in market activity due to the inward international travel ban.”
He said the market will continue to deteriorate until tourism begins to make a return to levels seen from 2017 to 2019. The recovery of the property market is likely to begin in 2022 and firm up in 2023, he added.
The heightening social tension in Thailand, where numerous street protests have taken place in recent weeks, demanding reforms to the military-controlled government and even the monarchy, is likely to make homebuyers and investors cautious about Thai real estate, potentially further dragging down the struggling industry.
“The protests to date have been mostly peaceful and have had little or no impact on local demand,” O’Sullivan said. “If they became more heated and disruptive we would expect there to be a decrease in market activity, which would likely be mirrored by foreign buyers.”
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