CBRE believes the Bangkok condominium market will continue to slow down as a result of Thailand’s weaker economy and the new LTV measures. In Q2 2019, we have seen declines Y-o-Y in net profits of many listed-developers as they have offered price discounts and special offers in projects where there is built but unsold inventory.
In order to boost the economy on concerns from the slowing economic growth as well as the strengthening Thai baht, the Bank of Thailand announced a reduction of the interest rate to 1.5% from 1.75%. The lower interest rate would encourage more people to spend and invest rather than save money in the banks. This may help increase domestic end-users demand and spending power for property.
Although foreign buyers, especially those from mainland China, have been making up for the weak domestic demand in the past year, we believe that sentiment could change as both the Chinese economy and currency have weakened due to the trade war, as well as tighter capital controls on getting money out of China. As a result, CBRE has seen a decrease in foreign sales compared to 2018.