Property Funds Present Low-Risk Alternatives

With stocks likely to remain bearish healthy into 2009, property funds stand for an eye-catching alternative for a lot of investors seeking comparatively low risk and constant returns.

Among the funds launched lately was a 3.2-billion-baht fund that embraces a 30-year lease on the five-star Centara Grand Beach Resort Samui.

Investing in a property fund permits small investors to invest in different types of properties with little capital, together with apartments, hotels and resorts, residential homes, shopping malls and also industrial estates.

One most important benefit to property funds when compared with straight investment is expediency and liquidity - a property fund keep a manager to manage the asset in response for a fixed fee.

Returns for property funds are comparable to stocks, where investors expand both in terms of dividends in addition to a capital gain - or loss - from changes in the cost of the unit trust.

Paramet Tongbua, head of equity research at Tisco Securities, said property funds put forward better security and less unpredictability than investing in a property stock.

Dividend capitulates for most property funds now vary from 8-9%, well outpacing bank deposits and coming with less danger than investing in shares of a property company, he said.

"Certain funds put forward fixed rate returns for a fixed period, subsequent to which, dividends depend on the working results," Mr Paramet said.

Although investors who subscribed to the primary offer of the fund have observed the value of CTARAF go down to just 9.25 baht per unit compared with its 10 baht par value, payable in part to investor apprehension about the health of the tourism sector.

Mr Paramet said investors should think about how market developments might influence various segments of the property market.

Mr Paramet said the Ticon Property Fund (TFUND) give the impression of being better balanced than others in the present market, as its spotlight on industrial estates meant less unpredictability than other property classes.

Pattaya Witnessing a Downturn As Supply Jumps Considerably

Pattaya is at present witnessing a downturn with a very noteworthy volume of fresh supply entering the market in 2008 and much more in the pipeline for 2009, says Robert Collins, managing director of Savills (Thailand) Limited.

The market is becoming progressively more and more classy and contemporary, says Mr Collins.

The complete volume of space at this point is expected to go beyond the level of end-user command in the resort city, given current economic conditions. Prices have also increased harshly in the last six months, to a certain extent on the back of current launches, especially Raimon Land Plc's The Lofts Southshore and the Waterfront project by the Elran Group of Israel.

This price increase comes at a time of escalating construction expenses, despite the fact that Raimon's previous project, Northpoint, got a very elevated actual sales rate toward the end of its promotion campaign.

“What we have observed at Northpoint, which was launched at a time when the market was tremendously optimistic, is that the pricing moved up at a more usual level, beginning low and finishing high,” said Mr Collins.

“You could state that the latest projects that have come online mostly ascertained their launch value at what can be believed some of the highest price points attained in the market so far.”

Showing this fast price hike is the jump at a few condominium developments from a range of 70,000 - 80,000 baht per square meter in 2007 to expectations of 100,000 to 140,000 baht these days.

At the same time as this reflects very excellent development in this period, Mr Collins senses they are very high values for the hundreds of units in these buildings, which for the majority part are not boutique developments.

“Though it's reasonable to say that the latest product coming online is obviously a development in terms of excellence and theory design over the accessible supply as a result the market is becoming more and more stylish and contemporary which will help”.

Condominium Market Ready for Hold Back

The condominium market, after an increasing movement in the past few years, is ready to hold back in 2009, in sequence with the financial system and the entire property market. The challenges currently developers are facing take in a plunge in investment potential and financial liquidity, lesser customer buoyancy and rising competition along with completed units joining the market.

Developers should be very cautious of adding further of these at a time when cash is emperor.

In the initial six months of 2008, nearly all condominium developers were concerned about cost-push caused by higher oil and steel prices, driven by hedge funds and increasing stipulate from leading consumers like China. Several developers tried to catch the costs of materials with contractors to stay away from losses from unpredictable costs.

Once the Beijing Olympic Games finished in late August, costs of oil and steel dropped to a standard level. The improving circumstances could have promoted the condominium market although the American financial meltdown, activated by the sub-prime crisis, attacked the worldwide economy in early September.

Though the Thai property market looks to get away a direct impact from the recent crisis, observers could not authenticate it would be protected. The consequences of the crisis would have ruthless effects for the financial market, the main source of funds for condominium developers and home purchasers.

This financial situation could agonize developers of condominium projects. Nearly all projects are pre-sale and consumers may be abandoned by financial institutions when their units are all set to transfer.

“If the crisis spreads to Thailand rapidly, possible purchasers may holdup decisions and have to wait and watch. Even investors and entrepreneurs will go round to holding cash in hand as condominium conjecture will not be a focus for them as in the past and they cannot look forward to a positive reception in unit prices as they would like.”

As a consequence, condominiums completed in 2009 - together with unsold completed units from 2008 and resale units - are expected to strengthen competition in the condominium market.

Clouds Figure Out On the Skyline

Thailand's real estate sector in 2009 will come across two big effects - the worldwide economic tsunami and long-drawn-out local political troubles - regardless of encouraging signs from easing price rises, declining prices of steel and oil, and a probable expansion of the government's tax inducements.

Dark is the night as the local industry fights back to deal with a double blow that has set aside probable purchasers and investors on the sidelines.

For the local market, 2008 has been an unstable year. The market in the initial two months of the year persistent to be slow, a development triggered late 2007 by the increasing prices of oil and steel and political improbability.

The response of home purchasers improved in March after the government announced tax incentives that took effect from March 29 2008 to March 28, 2009. Sales of nearly all property developers, particularly those developing low-rise units or units set to be transferred within the period, raised in the second quarter of 2008.

But the sales detonation lasted just some months and was condensed to a drop when the People's Alliance for Democracy seized Government House in late May. Many home purchasers delayed their decisions, as they were worried about the consequences of political conflict on the economy at the same time as some probable customers were simply in no mood to purchase.

Thongma Vijitpongpun, chief executive of the listed developer Preuksa Real Estate Plc (PS), said that subsequent to rejection rates and cancellations go up, the company required to track each consumer’s payment ability and tried to fix the troubles as early as possible to re-sell the units as soon as possible.

He said the economic recession had a pessimistic impact on home purchaser’s confidence although real command still existed. Unlike purchasers in the middle-priced section and those shopping for second homes, not very lots of first-time home purchasers delayed their decisions.

He also predicts a drop in the property market development rate by 5-10% compared to 2007. “The government should encourage demand with mega projects and expand the tax incentives,” he suggested.

Hua Hin Persists To Make Its Mark as a Leading Resort

Hua Hin and its nearby shore destinations - from Cha-am in the north to the beaches of Pran Buri in the south - have all experienced the collision from the worldwide economic slump.

Cha-am and Hua Hin have been most preferred tourist hotspots for Thai people as the calm beaches are within a short distance from Bangkok.

Political uncertainities have also slowed the real estate sector on the western coast of the Gulf of Thailand, as has stringent enforcement of overseas ownership rules.

"It is a conventional tourist hotspot. We have a walking street, a night market, many activities and a range of food. The majority of all, both Thai and foreign tourists consider very secure when they visit as a Royal Palace is situated here," said Hua Hin deputy mayor Suvit Reanroongruang.

Because of the royal presence, Hua Hin has been the favorite vacation hotspot for Thai aristocracy and wealthy residents and also European tourists, particularly retirees.

Holiday home development beginned in the 1990s when the majority were low-rise condominiums situated close to or on the beachfront.

Because of restricted beachfront land and elevated prices, a number of low-rise condominium developments runaway south to Pran Buri Beach.

Hua Hin property development solidified past 1997 financial crisis and recommenced in 2002-03 during the country's financial recuperation.

Condominium supply in Hua Hin and the neighboring areas keep on rising from 2003 and displayed a sharp increase in 2007, as per a study by the property agency Knight Frank Thailand.

Raimon Land's Condominium Focus Thailand reported condominium launches from 2003 to the first quarter of 2008 were 21 projects with 2,514 units.

Hua Hin is a top choice for possible property investors as 27% of all projects initiated in 2007 were in resort areas, and they recorded sales of 6.3 billion baht.

It is also remarkable that at the same time as Pattaya had established more interest from housing developers recently, Hua Hin continued to be striking because of its more tranquil atmosphere, more reasonable prices and faster development conclusion schedules. This pleaded to Thai purchasers.

Foreign Property Contracts Freezing Up

Internal political troubles are having a greater collision on the Thai property market than the financial economic recession, with no transactions made by overseas purchasers and investors so far in this conventionally high season, said Duangjai Kraus, managing director of the Hua Hin branch of the property consultant Engel & Volkers Ltd.

She said many overseas purchasers did not seem to get units after booking or making a down payment. Worse, a few decided to return units at the same time as fresh deals had vanished as purchasers decided to wait and watch.

Potential purchasers together with Britons stepped back as they were also experiencing a financial slump at home. However Scandinavians, who frequently visit Hua Hin, still visit their second homes in the beach town.

“Usually from October to February, we are very active with a huge number of property transactions although in 2008 the number of deals dropped by 70-80%,” she said.

She added the company might undergo approximately 500 million baht in lost sales all through the 3 months.

The hotel business in Hua Hin is also experiencing a fall in occupancy rates in spite of recuperation to 60-70% in November, with one luxury hotel single-handedly receiving postponement of 80 rooms.

One of the big deals under conciliation is the attainment of a golf course by a South Korean who planned to use up approximately 700 million-2 billion baht. In October, he checked out a number of golf courses in Bangkok, Hua Hin, Pattaya and Chiang Mai.

“Although he did not authenticate when he would visit again to assess the possible golf courses prior to making the ultimate decision,” said Mrs Duangjai. “He is also looking for a golf course in Vietnam and he might purchase it.”

As local political uncertainties have not been determined, she said the company did not get any criticism from an investor from the United Kingdom who wanted to purchase a big plot of land to build up a golf course and another one from the United States who wanted to capture a hotel or resort. Both deals would be of value around 1 billion baht each.

“It might take minimum 2 years to recreate the buoyancy. Everything should get better by the first quarter of 2009 so that we will be organized by mid 2009 to completely welcome a return of purchasers, investors and guests in the next high season,” Mrs Duangjai said.

Foreign Investor Curiosity in Thai Property Declining

The worldwide economic recession is having influence on the Thai property market as a Singaporean investor recently taken out an investment in a project on Sukhumvit Road, said Patima Jeerapaet, managing director of the property consultant Colliers International Thailand.

He said land and condominium values in the central business district (CBD) and Sukhumvit Road's early sois will turn down because of flaccid foreign command.

As per a Colliers database, more than 60% of foreign purchasers getting hold of a condominium unit priced at 180,000 baht a square meter were from the financial division. Number of them were investment bankers or investors gaining earnings from the finance business or the stock market and changing into the property sector.

“Foreign purchasers in front of a financial crisis have to sell property as promptly as possible. A few of them may sell at asking price or with a lower than predictable margin. This will cause decreasing prices however fresh purchasers are coming up. The prices will not be to the degree that considered.”

He said sensible prices for grade-A condominium units in the CBD and Sukhumvit Road close to the BTS skytrain should be amid 90,000-120,000 baht a sq m and 65,000-80,000 baht for grade B+.

Anant Asavabhokhin, president and chief executive officer of the country's leading developer Land & Houses Plc, said land prices in the Sukhumvit area raised to 500,000 baht a square wah from 300,000 baht in just 3 years.

He confirmed that land prices in the inner city would certainly decrease as rising prices in the earlier period were determined by foreign investors, generally from Hong Kong and Singapore. Simultaneously, condominium units on Sukhumvit Road close to the BTS skytrain, prices of which were at present cited at 130,000-140,000 baht per square meter, would face slow sales, he added.

“In 2009, purchasers will wait for construction to freeze to take their money back at the same time as developers will wait for purchaser’s uncertainty in paying to take away their down payments. Although ultimately, the developer will go broke first.”

Chaeng Wattana Turns Out To Be an Innovative Development Center

A lot of Bangkok property developers are turning their interest to the neighborhood of Rattanathibet and Chaeng Wattana roads, as the forthcoming opening of the new Bangkok Government Centre is making the area a center of attention for urban growth.

A recent survey revealed that property firms consider there will be huge demand for apartments in the area once the new government centre starts operations. Numbers of them are launching fresh projects there.

Sansiri, for example, has launched its most recent detached house project, Burasiri, on Chaeng Wattana Road. With just 184 units in a promotion for prices beginning at Bt5.14 million, the project has a market price of Bt1.2 billion.

The company's senior marketing manager Samatcha Promsiri said Sansiri saw huge demand in the site after the new government centre started.

The University of the Thai Chamber of Commerce also plans to release a fresh branch in Chaeng Wattana Road.

The new Bangkok Government Centre is a Bt19billion civil service complex on Chaeng Wattana Road that is at present above 80% finished.

The building will accommodate 35 government agencies and will develop into the workplace for approximately 30,000 civil servants. Developing the huge centre, on top of other government owned properties, has turned Dhanarak Asset Development, a state enterprise in the Treasury Department, successfully Thailand's leading property developer.

The range of the Chaeng Wattana project is now attracting an outbreak of housing developments, including condominiums in addition to detached housing.

Quality Houses has established two detached housing projects, jointly of value Bt4.51 billion. They comprise Laddarom at ChaipreukChaeng Wattana Road, of value Bt2.01 billion, and Casa Ville, of value Bt2.5 billion, on RatchaphreukChaeng Wattana Road.

Vilailux Development is setting up a condominium project of value Bt1 billion on a 10rai plot on Chaeng Wattana Road in 2009, its executive vice president Oraphan Laoprapassorn said.

Preuksa Real Estate has by now launched condominium projects in its brand The Seed in the Chaeng Wattana area. The buildings will be of 8 storeys and will present three types of apartments with floor space of about 22.5-64 square meters.

Moreover, The Bt200million project will present 60 units of 200 square meters.

Global Economic Recession and Financial Slowdown Are Disturbing Occupiers

Demand for office space in Bangkok in the third quarter of 2008 persistent to get better. Though, since the global economic recession exploded in October, demand has languished with large companies beforehand in view of occupying more office space now holding back or reducing their growth plans.

Head of Markets at Jones Lang LaSalle, said “Impact of the global financial slump has turn out to be more obvious. While a few economists estimated Thailand to feel the shock in early 2009, the chaos in the Thai stock market in the last few weeks shows that the Thai financial system has already been influenced.”

“The outcome of the global economic recession has also spilled over into the Bangkok office market. Occupiers that were aggressively seeking office expansion prospects in the first three quarters of 2008 are now rationalizing their development and occupancy plans. This imitates the less positive approach towards the short to medium term economic and business point of view on top of the current political uncertainty that has held back the country’s economic projections for over two years now,” she added.

At the same time as fresh demand from business expansion has constricted, demand for office space from fresh business association has dried up. In the third quarter of 2009, Jones Lang LaSalle was concerned in office leasing transactions adding more than 10,000 sq m of space across Bangkok, the majority of which were lease renewals and relocations.

“Despite the fact that demand is deliberate, excellent news is we have not seen any global corporations shut down operations in Thailand. Although most of these companies are seeking ways to reduce occupancy costs by means of renegotiation of lease terms with landlords, transfer to a more reasonable building or downsizing,” said Ms. Yupa.

However leasing activity in the last quarter of 2008 is slowing, full-year demand is likely to get better compared to 2007 due mainly to raised leasing activity in the initial three quarters. Though, vacancies are expected to go up more because of fresh supply coming on stream and the hold back in demand. Besides, rearrangement of more government agencies to the recently constructed Government Office Center will carry on contributing to the increase in vacancy rates in the coming months.

Firms jumping at opportunity to invest in abroad

Falling land prices are permitting local companies to discover excellent locations at excellent prices. Thai property firms are jumping at the chance of expanding out of the country currently the price of land and property projects in other countries are going down.

Earlier in 2008, TCC Land - a property firm possessed by beverage tycoon Charoen Sirivadhanabhakdi - cashed in by buying the Novotel Rockford Darling Harbour Hotel from Adelaide's Rockford Indigo Hotel Group for A$76 million.

Sources considering the deal said prior to the financial downturn hit the world, the hotel were priced at almost a$150 million, however after the downturn hit Australia, TCC Land thrived in getting the property at half price.

In the meantime, Central Pattana has beginned discussing a lease in China with the outlook of building its primary shopping complex abroad, at present leasing prices have decreased by 30% when compared to a few years ago.

"We are renegotiating with our property-owner in China, who is now presenting the lease at 30% below what was obtainable in 2007. There is high prospective for the discussions to be finished at a excellent price," said Naris Cheryklin, Central Pattana's senior executive vice president for finance and accounting, property, sales and marketing. "Global economic depressions have given Central Pattana a great prospect to find an excellent location at an excellent price."

Central Pattana had made an effort to lease land in the mainland in 2007, although the deal fell through for the reason that they could not settle on a price as at that time China's property market was flourishing.

Preuksa real estate is also rethinking its strategies to invest in Vietnam, at present that land prices have started ddecreasing thanks to the global financial despairs, chief executive Thongma Vijitphongphun said. Preuksa is planning to initiate studying residential developments in Ho Chi Minh City and has leave behind Bt300 million in case it decides to move ahead, he said.

Chaos in Thailand: It's Excellent Time to Purchase a Condominium

Consider Thailand currently and straight away the images are of complaints and closed airports. Exceptionally, regardless of unfavorable present events, it remains a great place to purchase property.

Generally demand for fresh condominium projects in central Bangkok slowed in the first half of 2008, mostly because of political chaos and increasing oil prices. The number of finished projects also moved down. In spite of this, some luxury projects were launched at record sky-scraping prices. The majority of the latest condo projects are in the Sukhumvit Road area. Average selling prices for off-plan property persistent to increase by 5%, lower than earlier periods. The yields are striking and a distinctive 1,200 square foot Bangkok apartment yields about 7.8% and smaller units produce higher yields of equal to 10.26%.

Thailand's house prices gone to maximum in 1992 and recent prices are still 10% below the 1992 level. Thailand's house price index rapidly improved after the Asian crisis and increased 53.8% from 1999 to 2006. Prices of latest business district condominiums have increased by an average of 10% per annum since 2003.

The reasons for this price growth are understandable. With strong infrastructure, a free-enterprise financial system, and normally pro-investment policies and increased by strong export growth, the Thai economy raised to 4.5% in 2007. Blessed with temperate and sociable people, tropical climate, spectacular beaches, abundant forests, unusual nightlife and high-end free time activities (water sports and golf being two), tourism has always been a support with approximately 14 million visiting Thailand in 2007 and traffic increasing at 20% annually. The positive exchange rates between Western currencies and the Thai baht make this country very interesting to holidaymakers, retirees and investors. Another advantage is that the cost of living is very low as compared to Western standards. In sequence with tourism expansion, the "buy-to-let" market in Thailand is striking as it means a higher possession rate all year round for the reason of the requirement for more temporary accommodation for visitors.

The government also just slashed property title transfer fees, mortgage registration fees and taxes to make better the property market.

Branded Expansions Push Samui Upmarket

Three branded developments and a thriving condominium project have pushed Samui to the high-end land of the market at the same time as still keeping up its boutique demand, says chairman of CB Richard Ellis Thailand.

This noteworthy change, which happened approximately 10 years ago with innovative persons undertaking private villa projects, whizzed to the lead with the launch of W Koh Samui Retreat & Residences.

“Samui has moved from having no branded projects 1 year ago to 3 now. The Estates isn't branded Four Seasons although it's basically part of the Four Seasons location and you in fact reach it all the way through the Four Seasons entrance hall.”

All these expansions are facilitated by Bangkok Airways' retro-style private airport on the island which puts tourists in a holiday frame of mind. Away from Bangkok and other places in Thailand this airport also serves flights from Hong Kong, Singapore and Kuala Lumpur.

Mr Simister predicts a bright opportunity for Samui for the reason that its locality will make it an essential part of the appearance of what he calls the "Riviera of Asia".

Even though Samui does not yet have a marina at the same time as Phuket has three in working condition with a fourth about to begin, the smaller island does have prospective.

Samui’s big prospect lies in its planned nearness to Hong Kong, Singapore, Cambodia and Vietnam, says Mr Simister.

Marinas have been talked about in Samui for a short time and there are locations obtainable for marinas of various sizes. There is a fishing society in Samui where fishermen can anchor therefore the prospective for boats are there.”

Samui's immense prospect, said Mr Simister, lies in its deliberate closeness to Hong Kong, Singapore, Cambodia and Vietnam. At the same time as Phuket and Langkawi put forward some very nice cruising waters on the other side of the peninsula, guests would have to make definite trips to reach them, even though a few charter boats for that area.

Thailand’s Property Market likely to shrink by 10%

Thailand's property market is likely to shrink by 5 -10% in 2009 as the country falls under the complete crash of the global financial slump and local political uncertainty carries on without declaration.

Most property developers and real estate agencies understand that the property market will fall considerably in 2009 as anxiety about upcoming earnings deepens and home-purchasers set away plans to purchase fresh residences.

A few purchasers of residential properties, without an apparent image of upcoming earnings, are likely to reduce their budgets and go for lower priced apartments. Above this, mortgages will be more complicated to acquire as commercial banks entail restrictions to defend against bad loans.

Preuksa Real Estate president and chief executive Thongma Vijitphongpun said his company would amend its designed residential projects in 2009 by concentrating on the middle of the market, with prices ranging from Bt1.5-3 million per unit, to meet client demand.

“We supposed that total real estate sector volume in 2009 will drop between 5–10% from the expected total volume of 80,000 units in 2008. We have observed the signs in this last quarter of 2008, when the number of visitors to our projects has decreased between 5-10% and presales have revealed only slight growth,” he said.

Generally, the final quarter of the year is the finest time for selling properties from housing developments.

LPN Development's managing director Opas Sripayak said his company would regulate its business plan in 2009 by dropping the size of its housing projects as per the estimated demand in different locations. This move is likely to offer a speedier cash flow than launching big projects.

“Our board has scrutinized the real estate sector and hopes it to fall in 2009, thus we have to be worried regarding our plans. We will keep on expanding our investments and launch fresh projects, however we have to be cautious,” he said.

Thailand's Condominium Market Affected By the Worldwide Economic Recession

Thailand's once-booming condominium market is greatly affected by the worldwide economic recession.

A major real estate consultancy said that property development is likely to fall some 18% in Bangkok in 2008, because of the worldwide economic recession.

High demand has conventionally motivated this sector, particularly the condominium market, as Thais hurry to grab apartments situated along train lines to save on high gas expenditures and stay away from Bangkok's disreputable traffic.

Industry leaders said looking for home purchasers is not the trouble. They said that in this financial atmosphere, discovering the capital to guarantee latest housing projects is the actual confront.

Property developers like Raimon Land are obviously worried about what lies in future. Although they said their leading locations in Bangkok and outside will help out them.

Nigel Cornick, CEO of Raimon Land said "We are thinking we will almost certainly be in for a hard-hitting period together with other Asian countries. To certain extent, we're observing it with the banking sector and credit controls being stringent."

Political unsteadiness is another worry. The Thai stock market has lost half of its rate from the time when anti-government protests started more than five months ago. Aggressive clashes between protesters and police in the beginning of October left two dead and hundreds injured.

Although developers said that to the extent that they can tell, the turbulence has not discouraged home purchasers. In its place, industry watchers said the international credit crisis is the most important factor dragging down the sector.

Profits from latest apartment sales are likely to total US$5 billion, down 6% from 2007.

In Bangkok, nearly 15,000 fewer apartments will be built regardless of the possible unaffected demand.

Local Balance a Healthy Symptom

Asset price rise and towering US property prices in the past decade definitely represent one key factor behind today's worldwide financial slump.

Could it take place again in Thailand? Nevertheless, the 1997 Asian financial slump suggests many parallels to the current circumstances, where low interest rates, tax lending practices and a disparity in information in the market lend a hand in forming an inequity between property supply and demand.

Although experts state that the Thai real estate sector is improbable to do again the troubles of a decade ago.

James Pitchon, executive director of the property agency CB Richard Ellis, said Bangkok condominium prices were expected to hold up in 2009 as units incoming in the market symbolize those built in 2008 when raw material and construction expenses increased.

The predictable turn down in latest foreign investment in 2009 because of the worldwide recession would also help to decrease the outlook of future fresh supply and thus hold up prices.

The rise in the number of emigrants in Bangkok, expected at 14% growth to 82,000 in 2008, still with the high political insecurity, will also hold up demand in the rental market. The constant shift in purchaser preferences among the urban middle-class for residences situated along mass transit routes will also be helpful for the demand.

“The condominium market, which has enjoyed fast growth from 2004, is likely to observe 10,000 latest completed units in 2009. The reality that we will have smaller amount of fresh supplies is reasonably healthy for the market,” Mr Pitchon said.

“Bangkok's middle-class life has changed noticeably with the launch of BTS Skytrain and MRTA [subway]. We look forward to Bangkok to turn into a focus city, sooner than one in which people move out to the suburbs.”

Mr Pitchon said real estate prices in Bangkok had been determined by construction expenses, which have doubled in the last 10 years. Developers are implausible to decrease prices, even if construction material prices have since decreased.

Banks Advised To Relieve Tight Loan Rules to Facilitate Market

Commercial banks should loosen their home-loan sanction circumstances together with income and employment necessities so as to help the property industry, advised Atip Bijanonda, president of the Thai Condominium Association.

Because of the worldwide economic slump, several banks in Thailand have constricted showing of mortgage applicants for fright of non-performing loans (NPLs), which is throbbing the real estate sector, he said.

“Home loans are essential as people still have to purchase apartments for living. With the banks being too cautious letting out loans, the financial cycle would be stopped," said Mr Atip, the deputy managing director of the listed developer Supalai Plc.

He said constricted limitations should be applied as a substitute on credit cards as many home purchasers with credit-card liability were discarded by the banks.

“The credit bureau should sensibly categorize consumers as loan requirements of a number of consumers could be discarded only for the reason of credit card liability of value as little as 5,000 baht,” he said. Nearly 20% of home loan applications are abandoned at present.

Mr Atip also said interest rates should be reduced by a minimum of 50 basis point in 2008 to motivate the property market.

He said the market in 2009 would be affected by concentrated buying power as people turn out to be more unconfident about their financial standing.

On the other hand, Mr Atip uttered no apprehensions over the condominium market position, saying that prices differ and can hold up purchasers at all income levels.

"Prices of condos in 2008 should be unwavering due partially to lower construction expenditures. Although there could be certain price amendment depending on the project locality," Mr Atip said.

Manop Bongsadadt, a lecturer at Chulalongkorn University's Faculty of Architecture, said the Bank of Thailand should release the non-performing loan hold back standard to relieve the credit crisis.

He said banks should categorize borrowers into three groups based on their credit class as low, medium and high-risk.
Developers should help undertaking loans of consumers with medium credit risk at the same time as borrowers with poor credit history or those with NPLs should be tenants instead of purchasers, he said.