Today, the Bangkok Metropolitan Region (BMR) has 525,889 vacant housing units which are mostly sold but does not have any residents. This situation indicates a bad sign. Dr.Sopon Pornchokchai recommends reusing these vacant housing units to prevent economic loss.
Dr.Sopon Pornchokchai, President of research and property valuation center in Thailand, Agency for Real Estate Affairs (www.area.co.th), in the name of President, Thai Appraisal and Estate Agents Foundation was supported by Metropolitan Electricity Authority (MEA) to evaluate a number of vacant housing units. Vacant housing units (Every type of housing units) are housing units which use less electricity than 15 units per month which indicates that there is almost no use.
The number of vacant housing units is crucial for both the government and the private sector. The government needs to develop housing policies and development plans, while the Metropolitan Electricity Authority (MEA) needs to install electricity meters to match residential demands. Private sectors, especially real estate developers, need to avoid developing projects in the over-supply area as these vacant housing units might become competitors. Theses information is also crucial for financial institutes, investors, and home buyers.
The latest surveys found 525,889 empty housing units (including condominiums, detached houses, semi-detached houses, townhouses, and shophouses) in the Bangkok Metropolitan Region (BMR). There are 110,000-120,000 units of new housing developments every year in the BMR. It means that these vacant housing units could still be in the market even without any new developments for 4 and a half years. This number indicates that we have a significant amount of vacant housing units, although it does not signal great danger.
These 525,889 vacant housing units make 10.3% of the 5,097,815 total housing units in the BMR, which means that there is 1 vacant unit in every 10 housing units. This ratio was lower than the situation during the Tom Yam Goong crisis, 20 years ago. In 1995, Dr.Sopon Pornchochai founded 14.5% of vacant housing units from the total housing units in the market. Then in 1998, the ratio of vacant housing units reduced to 12.0% of the total housing units in the market.
9.2% of the total low-rise housing units are empty (there is 1 empty unit in every 11 low-rise housing units). While 13.9% of the total condominiums are empty (there is 1 empty unit in every 7 condominium units). As condominiums are mostly used for an investment purpose while low-rise housing units are mostly used for residential purpose. Investors should invest in condominium carefully during this situation.
Compare to other countries such as Japan, Tokyo has 11.3% of vacant housing units from the total housing units in the market. However, the whole country has 14.0% of vacant housing units from the total housing units in Japan. People in Japan, especially young people, migrate from rural areas to live in urban areas. As Japan is an aged society, there is less demand for homeownership. Moreover, the maintenance cost is considered high due to high wages. People prefer to build new houses instead of renovating old houses.
In Thailand, the areas with the highest percentage of vacant housing units are Nonthaburi, Bangna and Bang Yai which has the rate of vacant housing units as followed, 13.7%, 13.5%, and 12.6%, respectively. These areas are popular among migrants to buy houses and condominiums for an investment purpose. The areas with the lowest rate of vacant housing units are Bang Phli, Min Buri, and Lad Kra Bang which has the percentage of vacant housing units as followed, 8.4%, 8.8%, and 9%, respectively. As these areas are far from the city center, there are less housing developments than others.
The top 3 safe zones which have low rates of vacant housing units are as followed. No.1 is Bang Phli area which has a total of 198,272 housing units; 16,674 or 8% of them are empty, which means there is 1 empty unit in every 12 housing units. No.2 is Min Buri area which has a total of 226,940 housing units; 19,976 or 9% of them are empty, which means there is 1 empty unit in every 11 housing units. No.3 is Lat Krabang area which has a total of 156,375 housing units; 14,009 or 9% of them are empty, which means there is 1 empty unit in every 11 housing units.
The top 3 danger zones which have high rates of vacant housing units are as followed. No.1 is Nonthaburi area which has a total of 335,421 housing units; 45,848 or 14% of them are empty, which means there is 1 empty unit in every 7 housing units. No.2 is Bangna area which has a total of 231,192 housing units; 31,289 or 14% of them are empty, which means there is 1 empty unit in every 7 housing units. No.3 is Bang Yai area which has a total of 221,492 housing units; 28,016 or 13% of them are empty, which means there is 1 empty unit in every 8 housing units.
For more in-depth analysis, every price range of condominiums in Bang Yai, Bang Phli, Bangna, Min Buri, Bang Kapi, Nonthaburi, Bang Khen, Bang Bua Thong, and Khlong Toei are to be concerned. As the rate of vacant housing units in these areas are as high as 13.5% - 17.5% (there is 1 empty unit in every 6 condominium units). Theses vacant housing units could compete with new housing developments in the area, causing the housing prices to remain low. Investing in condominiums in these areas need good cautious.
Dr.Sopon Pornchokchai recommends the government to support second home sales for these vacant housing units, as followed.
Organize home auctions under a market valuation to benefit everyone.
Establish Vacant Housing Units Loan funds to support the renovation costs of bringing these units back to use. The owner can sell these units at a better price than selling it before renovation.
Establish funds to buy empty second housing units for renovation and resell. These funds can buy properties for the cost of 90% of the market value. This action could support owners of vacant housing units to earn money for other investment.
Dr.Sopon Pornchokchai also recommends that the government should support people to reuse vacant housing units to prevent economic loss. A renovation of vacant housing units could also increase economic activity. Besides, it is cheaper than building new developments, and buyers can surely own the house. As minimum wages in Thailand is still low, the renovation cost is lower than in Japan which has higher wages and a higher proportion of elders.
Moreover, Dr.Sopon suggests that Thailand should collect Land and Building Tax for vacant housing units. If the owners buy residential properties and do not use the properties, the juristic person could seize these vacant housing units for sale. They could use this money for project maintenance. The government should also change legacy tax to be applied to every unit without exception; the rate could vary by the property value.
empty housing, vacant housing, Real Estate