Thailand Property Market Sees Low End Recovery
Posted On: 27/11/2009
The Thailand property market is finally catching on to the recovery that is being seen throughout Asia according to Thai real estate developers.
In an article in the Bangkok Post yesterday, Thongma Vijitpongpun, chief executive of Preuksa Real Estate Plc, the country's second-largest developer, said the number of units sold in the third quarter increased by 20% over the second after bottoming out in the fourth quarter last year.
"Consumer confidence is picking up," he said. The University of the Thai Chamber of Commerce survey confirmed this, their consumer confidence index rose from 72 to 74.5 in the second quarter.
"Many research houses reported the same - that Thailand's gross domestic product, which had dropped for four consecutive quarters, will bounce back," Vijitpongpun added.
According to government figures released today, Thai GDP grew by 1.3% in the third quarter. Added to growth in the second quarter, this put Thailand officially out of recession, but Q3 growth was significantly slower than the Q2 growth of 2.2%, which is a worrying sign.
The property market next year will grow by 5% to 10% in line with the improving economy, he said. This year the overall market is forecast to drop by 5% to 70,000 units worth 210 billion baht, Vijitpongpun said.
Housing sales totalled 45,000 units worth 138 billion baht in the first nine months of the year - down from 73,000 units worth 212 billion baht in the same period last year.
Mr Thongma said the residential market this year had undergone some changes. Several townhouse projects were launched this year but with prices lowered to match demand.
The property market's key drivers in 2010 will be the potential extension of tax breaks for buyers and developers, changes in Board of Investment Home regulations and an upward trend in interest rates, he said.
Kessara Thanyalakpark, executive director of the listed developer Sena Development Plc, said interest rates were expected to show an upward trend from mid-2010 and that from now until the second quarter of next year would be a good time to buy property.
"The economy is on an upward trends and interest rates are likely to be stable until mid-next year so purchasing power has improved," she said. "Political crises in the past did not have a significant impact on home purchases, but have caused instability in the government and have had an impact on the government's policy and its economic stimulus programmes."
According to all developers recently interviewed for news articles, the lower end of the market is where the real rebound is happening, with Thai's earning less than 50,000 baht making up the largest proportion of the buyers.
Elsewhere the luxury sector is still suffering from a massive lull in foreign demand. Recently there has been some positive signs of increasing activity from foreign buyers in Phuket, the Monte-Carlo or Millionaire's row of South East Asia. This likely signals similar increases in activity from foreign buyers in neighbouring islands of Koh Samui and Koh Phangan, which offer the same brand of luxury resort villas at much lower prices.
Though the mainland is currently offering up some bargains in emerging regions, like Pattaya, these rely on foreign investors and it will likely be mid-late 2010 or even into 2011 before we see any real growth in demand from that buyer group. At the moment overseas property is currently the foray of lifestyle buyers, predominantly among the wealthier sections of society.
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