Luxury condos, ownership transfer totals plummet 30%, investors ignore purchases Rent yield drops

Luxury condos priced at 3-10 million baht, total ownership transfers plummeted, the 5-7.5 million baht group was at its worst -30%. REIC points out that investors are delaying purchases due to LTV and rental yields decreasing. Tenants flee to find cheaper rooms instead. On the contrary, the condo group has a bright outlook.

By July 30, 2024, the real estate market will have entered a downtrend. Data from the Real Estate Information Center (REIC) for the first quarter of 2024 shows 72,954 property transfers, a decrease of -13.8% (yoy), with a value of 208,732 million baht, a decrease of -13.4% (yoy).

Luxury condominiums are selling out in droves, with transfers decreasing in both units and value.

This decline has affected all housing segments, especially the "condominium" segment , which saw its absorption rate, or the volume of real estate demand, decrease by -1.9%.

Focusing on the transfer of ownership of condominiums (condominiums) separated by price level, it was found that the price group of 3-10 million baht and above was heavily negative as follows.

• • Price 3.01-5 million baht, there are 3,159 units, a decrease of -13.4%, and a value of 12,017 million baht, a decrease of -15.2%.
  • Price 5.01-7.5 million baht, there are 1,141 units, a decrease of -30.3%, and a value of 6,867 million baht, a decrease of -30.4%.
  • Price 7.51-10 million baht, there are 469 units, a decrease of -20.9%, and a value of 4,065 million baht, a decrease of -20.7%.
  • Prices of 10 million baht and above, 711 units, decreased -26% and had a value of 14,135 million baht, decreased -17.9%.

Investors ignore purchasing luxury condos due to low LTV-yields due to tenants disappearing. Move to a cheap room

Dr. Wichai Wiratpan, Inspector of the Government Housing Bank and Acting Director of the Real Estate Information Center (REIC), revealed to "Finance & Banking" that the decrease in condo ownership transfers for properties priced between 3 and 10 million baht and above is likely due to investment buyers delaying their purchases, stemming from two main factors:

1. Cancellation of LTV relief measures for those purchasing a second home onwards. You will not be able to get a home loan for 100% of the home's value.

2. The rental rate of return (yield) decreases with more vacant rooms. Because the renter may have more expenses. So I went to find a cheap rental room instead. In addition, foreigners who returned during the Covid period may not come back yet

“The economy is not good. This causes the demand for rental rooms to decrease and become cheaper.”

By the editorial team bank finance

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