Sky high Sukhothai Apartments

The Bangkok skyline is packed with living spaces that present comfort and stunning views, although discovering something exceptional in the capital’s high-rise housing market can be quite complicated.

HKR International Ltd, a Hong Kong listed real estate developer and operator of the internationally commended Sukhothai Hotel, only just boarded on the growth of a contemporary, complicated and altogether exclusive project. The Sukhothai Residence entails not below 187 units, with sizes ranging from 100-1,200 square meters, in addition to 9 exclusive penthouse properties. The biggest of these penthouses, the “Sky Villa”, will boats its personal 18-metre swimming pool and patio garden, with interior designs illustrated as “really excellent”. Therefore excellent in truth, that the company looks forward to extraordinary bids for the villa, setting a new standard in the Bangkok penthouse market.

The 41 floors of the Sukhothai Apartment will take in a few of the most contemporary and aesthetically pleasant facilities in Bangkok. These take in a 50-metre swimming pool and floating pavilion, covering a juice bar, gym, yoga and aerobics studio, steam and sauna. At the same time as other attractions consist of a complete concierge service, children’s playroom, landscaped gardens, tennis courts and basement car parking, in addition to a complete set of executive services.

“We intend to make available a dream home for the discriminating few who value comfort living and value the Sukhothai civilization, “ said Mr. Cha, Director of HKR Asia Pacific. “Bringing together our widespread experience in building deluxe apartments and our brilliant strength and services, The Sukhothai apartments are suspended to develop into the most fashionable, ultra-premium condominium project in Bangkok. We are certain that this very elegant project will be well-received and bring fresh idea to the Thai property market.”

Construction for the project is ready to begin at the end of 2009 and the development likely to be finished by 2011.

Millennium Spreads Out In Thailand.

Millennium Resort Patong, Phuket Hotel has opened for commerce in the heart of well-known Patong Beach in Phuket, Thailand’s major resort town.

In November, one more Thai hotel, the Grand Millennium Sukhumvit Bangkok Hotel opened for business, showcasing the group’s most modern premier 5-star brand to the Thai market.

Millennium Resort Patong hotel is possessed by Phuket Square Company Ltd and supervised by M&C. Phuket Square Company Ltd is the owner and developer of the Phuket Jungceylon shopping and holiday complex where the M&C hotel is situated.( Jungceylon is the Portuguese actual name for Phuket.)

In March 2006, Real Estate Capital Asia Partners L.P (RECAP) all the way through Dolruethai Co.,Ltd obtained a 95% attention in the Phuket Jungceylon project, a mega hotel and retail complex of 2million square feet. RECAP is a classified real estate fund in which the City Developments Limited Group (CDL) has noteworthy interest with a US-based investment fund and other restricted partners.

“The exclusive infrastructure and abundant tropical surroundings at the Millennium Resort Patong, Phuket will offer travelers a lavish experience unmatched by any other in the province. The landscape creates an essential element for the interior decoration of this property. This metropolitan resort will make available guests a taste of the contemporary Asian-Thai chic, blending both familiarity and complexity in an outstanding location.

“It is located as a top resort in Phuket, designed in a modern Asian style with superb Thai touches,” said Mr Kwek Leng Beng, Executive Chairman of the Hong Leong Group Singapore, which takes in property giant CDL and London-listed M&C.

Suitably situated on Rat-Uthit Road at the junction of Bangla Street in Patong, a well-liked area in Phuket, the Millennium Resort Patong, presents an abstractly exclusive infrastructure – this hotel includes two wings known as the Beachside and Lakeside.

“For those looking to pamper, the Millennium Resort Patong, Phuket is a perfect cherished tropical hideaway for travelers.” said Mr Michael Sengol, Chief Operating Officer of M&C.

Decline in Phuket Property Prices

If you have ever thought of investing in property in Phuket, now is the finest time to purchase.

Over 2008, the financial recession has affected many globally, but ultimately there is light at the end of the tunnel and experienced investors who know how to take advantage of this recession are starting to grab a few great property deals in Phuket.

Let’s have a look at why Phuket is so thriving.

The property market in Phuket has always been flexible and even faced with a global economic recession; experts are not forecasting that prices will fall. Actually, when we study the prices of Phuket property in the past 10 years, we have seen strong development even in the wake of the stock market collision of 1997, the Sars outbreak, the 2004 Tsunami and most lately the 2006 military revolution.

The Phuket property market is very strong for quite a lot of reasons although mainly cause of the fact that it is almost completely cash based meaning there are a handful mortgages. People who have already purchased and are purchasing property in Phuket normally do so for longer term profits and investment more willingly than trying to cash in on immediate profits by “flipping” properties prior to the final payment is payable, as you see in many other places, like Dubai.

This has the result of avoiding the formation of "bubbles" in property values and then the usual bursting of those "bubbles" which leads to prices booming, as we are at present observing in the U.S. property market.

Phuket is a world class holiday hotspot, which fascinated more than 4.7 million visitors in 2007, with strong development in the high end sector.

Plans have been announced in recent times to improve Phuket International Airport and it146s capacity will be nearly doubled by 2010.

As the fame of Phuket continues to increase, so the number of five star hotels all over the island has increased considerably in recent years.

CBD Land Prices Declining A Sheer 20-30%

Land prices in Bangkok's central business district (CBD) has by now started to decrease 20-30% due to concentrated demand, Sahatchai Kwancheun, vice president of property firm Harrison, said recently.

He said the most recent deal the company finished prior to New Year's was the sale of a few land on Silom Road for Bt500,000 a square wah, instead of a 28.57% fall from Bt700,000 a square wah at the beginning of 2008.

The Sukhumvit City Resort condominium project in Sukhumvit Soi 11 has also been enforced to lower its cost, from Bt90,000- Bt79,000 a square meter.

Even though demand for undeveloped land and housing projects continues to rise, investors are postponing their purchases, for the reason that most consider land and apartments in the Kingdom, particularly in the CBD, will drop 20-30% once the global crisis begins in reality affecting the local economy, Sahatchai said.

He said investors started waiting to notice what would take place in 2008's final quarter, even though a few plan to start investing in early 2009, particularly those from the Middle East. Singaporean investors have by now started shopping for housing projects.

Prime business localities have seen prices falling 20-30% for undeveloped land and 15-20% for condominium projects.

He said land and apartment prices on Sathorn, Silom and lower Sukhumvit roads were also declining, however just 10-20% for undeveloped land and 10-15% for apartments, because of inadequate supply in those locations.

Harrison will auction off 31 plots of land and building projects of value Bt6 billion this month, together with undeveloped land, hotels and resorts, and serviced and normal apartments, both in Bangkok and upcountry.

“We want to hold this auction to increase our sales and encourage the property market in the first half of 2009, mainly with asset prices now just starting to decrease 10-20 % from 2008,” Sahatchai said.

Investors can discover a number of great deals in the market now compared with 2008, he said, adding that the company anticipated earnings of Bt1-1.5 billion from joint assets of value Bt6 billion in the auction.

The Asia-Pacific Property Market Will Decline In the Coming 1-2 Years.

Rental and capital values will turn down across most of the area on the back of slower professional and investor demand accompanied by the quick run up observed in current years.

Though many of the regional markets are apt to observe a major alteration in values, primary long term drivers and financial growth prospects should make certain that most real estate markets in AsiaPacific go back to the development phase some time in 2010 or 2011.

The research revealed that demand for office space in leading financial centers is being considerably impacted by job losses in the economic sector, and professional demand in lots of other office markets is slowing on the back of weaker financial circumstances usually. The retail and housing sectors are susceptible to uncertain retail spending and increasing unemployment, as the industrial sector will be impacted by the hold back in international trade.

Internationally, the concentrated amount of debt obtainable to fund fresh transactions has led to a sharp drop in commercial real estate transaction volumes in 2009. The most recent blow to the investment market is the run away of German open ended funds, which are now backing away from fresh purchases; however have yet to sense pressured to sell.

In the Middle East, the requirement for more equity and less debt is ensuing in a repatriation of funds back to the area. Regional capital market circumstances have diluted.

In AsiaPacific, the number of investment deals remains near to the ground. Debt accessibility persists to be tense and the bid/ask spread between sellers and purchasers is hindering deal flow, an altercation that is likely to persist over the term.

Moving ahead, yields are likely to reduce more in most markets as risk premiums and necessary rates of return have increased. Retail yields held comparatively dense in the third quarter of 2009, even though transactional proofs has been slender. Yields are likely to reduce as the gloomier retail market outlook will probable force vendors to price their assets more sensibly.

Property Market Could Shrink 10-20% In 2009

For the time being, the Government Housing Bank reduced its latest home loan target for 2008 from Bt90 billion-Bt79 billion after new mortgage loan applications in last quarter of 2008 took a leap.

The bank also viewed its mortgage loan target for 2009 at a more conventional Bt73 billion after catching clues of crashing market response, GHB president Khan Prachuabmoh told.

Preuksa Real Estate president and CEO Thongma Vijitpongpun said the developer estimates that demand in greater Bangkok will go down 20% from 56,000 units in 2008 to 40,000 units in 2009.

Home purchasers will panic that their future earnings would go down after the global crisis hits the economy particularly the export and travel sectors.

“We observe demand for residences lessening since the last quarter of 2008 when our consumers visiting our housing projects decreased between 20-30%,” he said.

Though, if the new government is secure and launches policies to encourage the economy, the property market may get better in the second half of 2009, he said.

Property Perfect managing director Chainid Ngowsirimanee considers that the global slump will be less of a risk to the economy than the economic crisis of 1997 for the reason that now developers are in improved financial form.

Though, the company has to amend its business plan prior to the economic slump in 2009 by managing its cash flow and developing projects that produce cash more willingly than spend cash, he said.

Suphin Mechuchep, managing director of Jones Lang LaSalle (Thailand), said the global downturn started to upset the market in the last quarter of 2008 mainly for high rise housing projects and commercial projects.

As per the international property agency's research, rental rates for office space started to reduce in the final quarter of 2008, from an average of Bt616 per square meter per month for Grade A office early in 2008 to Bt600.

In the meantime, office space is moving towards oversupply with almost 600,000 square meters of fresh office space to be completed in 2009, together with 400,000 square meters for the new Government Centre office.

Developers Advise the Government to Increase Tax Allowances For Home Purchasers

Property developers have called on the new government to raise the tax allowance for home purchasers from Bt100,000-Bt200,000, as a means of straightforwardly growing purchasing power in 2009, at a time when customers will be hit by the global economic recession.

They also asked the government to expand long leases for foreign purchasers from 30 years to 60 or even 90 years, as a way to improve purchasing power in that section of the market.

Nobel Development managing director Thongchai Busrapan said the most successful measure that would straightforwardly do good to home purchasers would be escalating the tax allowance for those purchasing into housing projects for their first home. They put forward the existing allowance be doubled from Bt100,000-Bt200,000, which would boost their purchasing power.

“The tax allowance of value Bt100,000 has focused on purchasers of apartments valued at approximately Bt1.5 million. If the allowance is elevated to Bt200,000, that would develop the market for those purchasing more expensive apartments,” he said.

Prasert Taedullsatit, director and chief operating officer of Preuksa Real Estate, said that if the government improved the tax allowance for down payments in the first six months of 2009, it would be a reception boost for the market.

Demand for housing projects this quarter has minimized by over half from the same period in 2008. This tendency is likely to carry on until the first half of 2009. Thus, Preuksa called on the government to launch provisional measures to improve the market in the coming six months, he said.

“In case the government supports these proposals, it would honestly boost purchasing power,” he said.

“If the property market can get better, it will also assist linked businesses to develop. That sequentially would facilitate the economy endure the global financial slump,” he added.

Crisis and Prospect

Construction outline this time initiates right at the beginning of 2009. In order to take out various conclusions about what is going to take place in the construction industry in the first quarter of 2009, let's start on by reviewing the entire performance and health of the industry in 2009.

In the first half of 2008, long-drawn-out political uncertainty was daunting investor's assurance and government policies in the construction industry. No fresh mega-projects were launched. Cement consumption growth was less 6%, compared with 2007. In the second half of 2008, the US financial crisis deteriorated the global economy, which influenced the development rate of domestic cement consumption and the volume of exported cement decreased 20% year on year.

In addition, the number of allowed land allotments all over the country was reduced 25% in the initial nine months of 2008, and at the end of 2008 the residential market was oversupplied to the air of approximately 300,000 units.

Until now in 2009, the global crisis has been affecting the Thai financial system even harder. The Bank of Thailand is foretelling gross domestic product development of 0.5-2%.

The spectacular recession in the economy and low buyer assurance in upcoming income will straightforwardly affect buying-power and demand for fresh property. It is also predictable that most banks and financial institutes will lift up limitations on the accessibility of credit in 2009; as a result there will be trouble in financing fresh construction projects.

Since residential estates have a significant oversupply waiting to be sold in 2009, a lot of real-estate investors have postponed fresh investments. The Kasikorn Research Centre expects housing completions in 2009 in the greater Bangkok area will drop 14.8% from 2008.

In order to carry on in this environment, developers have to get used to their business policies to match customer demand. Focused marketing may require to be changed to mass marketing so as to cover the residential segment.

Among the horrible troubles affecting the construction industry, let us take a glance at the Chinese word wei-ji, which means "crisis". If the two parts of the word are divided, wei means "danger" and ji means "prospect". This reveals that no matter how complicated the situation, no matter how risky the condition, a wonderful prospect lies at the heart of every calamity.

Thailand May Turn Out To Be a Retirees’ Heaven

Thailand has long been a stifling holiday destination and in recent years, the country has in addition turned out to be a property investment destination.

Similar to several other countries, Thailand has started to sense the effects of the present financial slump and in light of this, developers are searching for fresh ways of dealing with property investment. A few modern companies have found accomplishment by dealing with a comparatively fresh market, one that gratifies the specific requirements of European retirees.

When people imagine of property in Thailand, the names of Phuket, Pattaya and Samui generally suggest itself as well-recognized regions that accommodate foreign investors. On the other hand, this fresh market involves retirement developments situated in non-tourist areas.

Developer Paul Derstroff is finding that, even though a large number of buildings are still in progress in Thailand, developments’ heading for servicing a definite market looks to be better at resisting the hard times. “A rising number of projects have made the market more aggressive. Though, our developments don’t contend with these projects,” says Paul. “We are directed on a target group in a niche market made up of purchasers who want to shift to Thailand.”

Much of the pleasant appearance of these types of developments lies in the suppleness of the terms presented. Developers not only put forward leasehold houses and condominiums however a few developers also trade condominiums on a shared possession basis. “A lot of people don’t live here entire year therefore two people can buy a property in cooperation and share possession,” Paul says.

Thailand is striking to a lot of European retirees not only for its type of weather and striking lifestyle, however also because Thai living costs are a division of those in Europe, a major concern for people on fixed pensions or incomes. On the other hand, interest in Thailand as a retirement alternative is not only coming from Europeans. There are also enquiries from people in Japan and the Middle East, and a few companies have beginned promoting developments in Hong Kong and Singapore.

James Gonzalez, Market Analyst at Obelisk, views this Thai experience as a reasonable adjustment to changing financial circumstances. “Retirees are seeking the best value for money and developers are looking at undertaking the achievement of their projects. Providing products particularly intended at the fast growing retiree market makes elegant business in any financial environment and not only during a recession.”

Small Companies May Not Complete Their Projects In 2009

A number of Thailand's leading property firms are expressing apprehension about small and medium-sized property developers who may no longer be economically proficient of delivering fresh homes to their consumers from projects started in 2008.

These anxieties came to light when LPN Development managing director Opas Sripayak was enlightening his company's strategies for resisting the effects of the global economic recession.

Thailand's property market started to experience the effects of the global financial slump in the last quarter of 2008, when home purchasers started to postpone their decisions to purchase from housing projects.

Even though this crisis started in the US, which is a long way from Thailand, I think this country's financial system and the property market will be distressed. This is due to the fact that Thailand's economy - particularly its exports - will go down when demand for our export products in the US and Europe falls. This will have an oblique influence on Thai people as their earnings should go down.

Though, this crisis will have a poorer impact on Thailand's financial system than the financial recession in 1997, as most of the country's commercial banks start to limit the stipulation of mortgages early 2008. Therefore, Thailand's commercial banks are economically strong when compared with their situation in 1997.

On the other hand, the commercial banks' limitations on providing mortgages for home purchasers will have a pessimistic influence on the real estate sector in 2009.

What is your business policy for surviving this recession and maintaining your business development?

We have started to check our latest investment in emergent land and we are exercising concern in the introduction of new housing projects by downsizing the projects. This will accelerate sales and produce income earlier than property projects of a bigger size.

In the meantime, the company is also managing both its operational and construction expenses by altering its business structure and freezing plans to employ innovative staff.

Motivation Good for Property

“The most important problem facing Thailand's real-estate sector now is the lethargic demand subsequent to the global financial meltdown and its influence on the real economy. If the government's financial-motivation package can help develop the entire economy and as a result improve customer confidence, the real-estate sector will ultimately gain as real-estate demand is tied strongly with entire economic situation,” said Suphin Mechuchep, managing director of Jones Lang LaSalle.

Part of the package consists of motivation measures for the real estate sector.

The government plans to double the tax deduction on residence mortgages from Bt100,000-Bt200,000 and support more lending to low-income home purchasers.

“The property motivation measures increase the affordability of housing purchases and pick up the pace of the decision-making procedure. Though, we do not look forward to observe much impact from these measures, as they are improbable to help re-establish the customer confidence hurt by the constant political turmoil and reducing economic outlook. As long as customers feel unconfident about their employment and upcoming income, they are not likely to hand over themselves to any loan burden,” Suphin said.

The government should concentrate on improving the entire economy, by looking for measures to minimize impact from the global financial recession and projects that will help make jobs and increase purchasing power in all divisions. Measures to enhance the export and tourism industries are also necessary, said Suphin. More motivation to catch the attention of foreign investments may be required in order to make Thailand viable. Investment in infrastructure should also move ahead.

“Development in the entire economy will help enhance demand in both the commercial and housing property sectors,” Suphin added.

Asian Property Development CEO Anuphong Asvabhokhin also considers the latest property-motivation measures will force the market to continue growth in 2009, having faced a pessimistic influence from the local political turmoil.

“Our client visits has improved from an average of 100 visitors to 300 -400 early in 2009. This is a good symptom for the property market in 2009, after a noteworthy plunge in the last quarter of 2009," he said.

Middle-Income Group Will Continue Purchasing

Property firm Supalai is sure of constant growth in demand for houses from middle-income earners, regardless of the global financial crisis.

It is preparing to move ahead with 12 housing projects in 2009, including 4 city condominiums, and its president Prateep Tangmatitham considers definitely that the entire property market will go down by no more than 5-10%.

Do you believe the global financial crisis will influence Thailand's property market?

We think that Thailand will get a minor pessimistic influence from global financial crisis, for the reason that Thailand's property firms are now economically strong.

The property market experienced a tough time in the 1997 economic slump, and most property firms learnt how to handle their business during a crisis. That's why most of them are now in a well-built economic condition. We consider that most of them will float through this twin crisis of global recession and political disorder.

The global financial recession will have a direct pessimistic influence on exports and the tourist division, and that may have an influence on purchasing power for the reason that people's earnings will plunge after the collapse in income from exports and the tourism division.

That may ultimately have an influence on Thailand's property market, when home purchasers postpone their decisions to purchase, or decrease their budget to purchase an apartment from Bt5 million-Bt3 million per unit.

On the other hand, this is a lesser crash for Thailand's property market this time.

Though the financial system will be distressed by the global financial slump, we consider that local demand for housing properties will keep on growing as a few factors are helping home purchasers to save costs. These consist of lower interest rates, a plunge in construction expenses and the government's tax incentives for home purchasers.

Thailand's property market in 2009 may be worse than 2008 due to a crash in purchasing power, although we think this will affect the conjecture market more than actual demand.

Demand for luxury apartments will be poorer as most purchasers in the luxury market are buying a second home. They may postpone their decision to purchase and in its place modernize their existing home.

Weakness Observed In Bangkok Luxury Condominium Market

The luxury condominium market will drop in 2009 as the global economic downturn continues to shrink the much-required pool of cash-wealthy foreign investors, local property analysts said.

They forecast that luxury condominium prices would go down by 10-20% in the first six months of 2009. Existing high prices will suppress local command, as the local political turmoil destabilizes investor outlook, they said.

Even though Bangkok's luxury condominiums being comparatively low-priced - at just 100,000-150,000 baht (S$4,300-6,500) per square meter, 8-12 times below a similar property in Singapore or Hong Kong, as per Jones Lang LaSalle Research - command has plunged, analysts said.

“Luxury condominiums depend on overseas purchasers. With the global recession, there are no purchasers left,” said Thaninee Satirareungchai, property analyst, KGI Securities (Thailand).

UOB Kay Hian (Thailand) anticipates sector prices to go down by 10-15% to encourage demand from Thai purchasers, who tend to go for luxury single-detached houses to a certain extent than condominiums.

Thai law stops foreigners from purchasing land; however they are permitted to purchase up to 49% of the commercial space in a condominium, therefore the sector's reliance on overseas investors.

A drop will offer investment prospect for bargain hunters, said Veena Naidu, head of research, UOB Kay Hian (Thailand).

CB Richard Ellis (Thailand), a leading realtor, said that forecasts of a comprehensive sector crash were wrong, and that it had observed no evidence of declining prices in existing luxury properties.

The major factors in Bangkok's rising and falling luxury property prices were increasing land and commodity costs, he said. At the same time as the price of oil has decreased, said Mr Pitchon, the importance of Bangkok's CBD land was not constricting, adding that dropping commodity prices were not likely to have an effect on the sector in the coming two years.

“Commodity prices have decreased, as a result in theory new construction expenses will also decrease. There will be very few, if any, fresh projects launched in the coming 24 months, thus we are not going to have contending products with the fresh lower construction expenses.”

The Lofts Southshore’s Second Tower Launch Replicates Long-Term Command for Inexpensive Resor

In spite of the current global economic recession, luxury real estate developer Raimon Land remains devoted to the long-term prospective of the Thai property market with the launch of the 417-unit second tower at The Lofts Southshore in Pattaya.

The two-tower development brings Thailand’s well ascertained “The Lofts” lifestyle perception of providing a quality contemporary urban design and functionality at an inexpensive price to the Kingdom’s most well-liked beach resort.

Raimon Land Chief Executive Officer, Nigel Cornick, acknowledged lots of developers in Thailand have been hit by economic hardships, which places a number of projects completion in suspicion. Though, Raimon Land views notions new financial circumstances as a prospect to extend value to its clients.

“Thailand has noticeably had an interesting end to 2008, and the global economy’s slide has more compounded problems, however Raimon Land maintains its lasting support for the Thai property industry, mainly on the Eastern Seaboard,” he said.

“We discover there is still command for quality condominiums in Pattaya if investors can feel 100% convinced they will be constructed, completed and handed over. The launch of the second tower at The Lofts Southshore provides purchasers with an aggressive alternative where the quality of materials can be confirmed by inspecting our show suites.”

Mr Cornick added substantial savings are being negotiated with probable construction contractors because of current falls in commodity prices and a more aggressive construction industry, which will be passed on to purchasers.

“We have managed to optimize value in the second tower, at the same time as maintaining the innovative stipulations and the program is still on course for the instigation of piling by mid-2009,” he said.

Values for the 46-storey second tower begin at THB50,000 per square meter (psm) or approximately THB1.9 million for a studio. The 1, 2 and 3 bedroom apartments range from 58-169sqm. Duplexes are obtainable as are roomy 259-295sqm penthouses with private gardens.

Property Market Expected To Plunge Regardless Of Spur

The property market is likely to face a plunge of 5-10% in 2009 as Thailand gets caught up in the global financial crisis, say experts.

This will lead to a credit constrict and lower buying power.

Even though the government plans to make two times the tax allowance on property sales from Bt100,000-Bt200,000 in 2009, that will only slightly improve buying power if probable home purchasers remain worried about their future income.

Fewer transactions are estimated in 2009, although apartment prices will drop 5-10% thanks to the government's expansion of tax incentives on property sales by one more year, to March 28, 2010, and a turn down in construction-material prices.

Supalai president Prateep Tangmatitham said buying power for purchasing housing projects had already fallen considerably in the fourth quarter of 2008.

“When the government raise the tax allowance from Bt100,000-Bt200,000, that will heighten demand for residences priced between Bt1.5 million-Bt3 million, making them more striking to acquire. Though, that will hold correct only for home purchasers who are certain about their future income," said Noble Development managing director Thongchai Busrapan.

However Naporn Soonthorn-chitcharoen, senior executive vice president of property-market leader Land and Houses, is less positive. He, too, considers 2009's property market will go down 5-10%, as a result of home purchasers postponing their decision to purchase out of apprehension about future incomes.

"The government will begin a new package to elevate the tax allowance. That will boost the disposable income of existing home purchasers, as their taxable income will be deducted. However it won't encourage fresh purchases providing potential home purchasers are still anxious about their future income.” he said.

Therefore, property developers must be cautious about their cash flow before growing their investment in 2009, he said.

A lot of home purchasers have chosen the housing projects that will be complete in 2009 after other projects faced construction postponement or were even poised after encountering new limitations on commercial-bank loans in 2008, he said.

Developers Reduce Revenue Forecasts

Buyer sentiment deteriorates as economic crisis, political trouble hit spending power
Most of Thailand's property developers have modified their 2008 revenue forecasts downwards in the face of a down market that began to fall into trouble several months ago.

Potential home purchasers, with their immediate future clouded by the double effects of the global financial crisis and local political turmoil, are shying away from what is to a lot of of them the most prevalent economic commitment of their lives - purchasing a new home.
A recent study by The Nation has found that top property developers, together holding 70% of the Bt80billion property market have moved back from previous revenue targets and have set poorer figures.

Preuksa Real Estate, for instance, has modified estimated revenue down to Bt13 billion from its previous target of Bt14 billion. Land and Houses' revenue conjecture for this year is down from Bt21 billion - Bt16 billion, and Property Perfect has reduced its revenue target from Bt8 billion - Bt7.5 billion. Supalai has modified its presale target from Bt10 billion - Bt9 billion.

Property Perfect's managing director Chainid Ngowsirimanee said his company had modifdied its revenue target from Bt8 billion - Bt7.5 billion when home purchasers started postponing their decisions to purchase.

Purchasing power has fallen considerably in the last quarter of 2008, compared with the initial nine months, following protest stroke by the People's Alliance for Democracy (PAD) in closing Bangkok's airports, he said.

“Usually, the final quarter in every year is a peak season for selling housing projects; however in 2008 we have faced an unusual environment. The country's political uncertainty has had a greater pessimistic influence on Thailand's economic sentiment than the global recession,” he said.

The REIC considers that demand for housing projects with units priced between Bt2 million-Bt5 million will experience less influence from the recession as this is where current genuine demand exists in the market.

Luxury housing projects that are focused on purchasers from abroad, alternatively, will suffer a direct influence from the recession when foreign investors postpone their overseas spending.

Supalai Optimistic On Middle Market Development

Supalai continues to be buoyant about the property market in 2009 and plans to launch 12 housing projects in 2009 with a market value of almost Bt16 billion, its president, Prateep Tangmatitham, said.

"Though Thailand's economy will get a pessimistic impact from the global financial crisis in 2009, I believe that local demand for housing property will continue to develop as some economic factors are helping home purchasers to save their money. These take in lower interest rates, a drop in construction expenses and the government's tax incentives for home purchasers," he said.

On the other hand, Supalai will modify its product mix by raising its number of low-rise projects. Currently, the company makes 68% of its revenue from condominium projects and 32% from low-rise projects, together with town houses and detached houses. In 2009, the percentages will change to 50% from each.

Prateep said the company had to alter its product mix for the reason of the construction procedure and market command. When building condominiums, the construction period takes 1 ½ - 2 years, which means the company has to bring in money into a project for that time prior to expecting any returns.

Detached houses or townhouses, in contrast, take approximately 6-8 months to build and are producing income much more quickly.

As a result, eight of Supalai's 12 new housing projects in 2009 will be detached houses and townhouses and just 4 will be condominiums.

The company will also reduce on the total money it will spend in 2009 to purchase undeveloped land, from its normal budget of Bt3 billion to approximately Bt2 billion, as it now holds 7 undeveloped plots in Bangkok - enough for new housing projects until 2011.

The company also has a excess of housing units of value Bt14.9 billion which are presold and waiting for the end of construction ahead of being handed over to consumers. Of this amount, Bt1.5 billion will booked to the company's revenue before the end of 2008.

The company also has an account of housing properties of value Bt11.8 billion that it look forward to sell over the coming three years. This will be enough to uphold Supalai's business growth in 2009.

Real Estate Sector Revival In 2011

Thailand's real estate sector cannot be likely to get better from the current fall until 2011, as per managing director of international property agency CB Richard Ellis (Thailand).

She said the fall started in the final quarter of this 2008 with demand in Thailand's real estate sector plunging under the darkness of the global financial crisis.

The company's research reveals that transactions have dropped in all property segments in the recent quarter, a few of them notably, others to some extent. This is a symbol that the property market may go down by 10% to 20% in 2009, the steepest fall since the economic crisis in 1997, she said.

Though, she believes the real estate sector will get better in 2011, concurrently as the global economy recuperates from its current depression.

"We consider that this upturn cycle will be quicker than that after the 1997 economic crisis as global leaders like the US, UK, Europe, Japan and China has launched measures to resolve the trouble. In the meantime, Thailand's property developers and finance firms are recovered, economically, than they were in 1997," she said.

She said the downtown condominium market was the primary segment to be effected by both the global economic crisis and local political volatility.

"Command for downtown condominiums, particularly luxury condominiums, has dropped notably, from both local and foreign purchasers, in the final quarter of 2008," she said.

Local demand crashed for the reason that both home purchasers and investors are worried about their potential earnings, in addition to worrying that projects might not be finished.

"Local investors have sufficient cash to invest, however most of them think that residential project prices will go on to drop in 2009, therefore most of them are holding up their decisions to purchase," she said.

Foreign purchasers, alternatively, have perched investment and are holding on to their cash after feeling the direct effect of the global crisis.

Offices for rent and serviced apartments will also experience a pessimistic impact when a few multinational firms reduce their spending by cutting down office space and plummeting staff numbers, she said. This will decrease the occupancy rate of both offices for rent and serviced apartments in 2009.

Pattaya Witnessing a Hold Back As Supply Jumps Considerably

Pattaya is at present witnessing a hold back with a very considerable volume of fresh supply entering the market in 2008 and many more in the pipeline for 2009, says Robert Collins, managing director of Savills Limited.

The market is becoming more and more complicated 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 circumstances. Prices have also increased harshly in the last six months, somewhat on the back of fresh launches, particularly Raimon Land Plc's The Lofts Southshore and the Waterfront project by the Elran Group of Israel.

This price hike comes at a time of rising construction costs, although Raimon's earlier project, Northpoint, attained a very high authentic sales rate just before the end of its marketing campaign.

"What we have observed at Northpoint, which was launched at a time when the market was tremendously optimistic, is that the pricing increased at a more usual level, beginning low and concluding high," said Mr Collins.

"You could state that the latest projects that have come online on the whole established their launch price at what can be judged as some of the highest price points attained in the market to this point."

At the same time as this reflects extremely good growth in this period, Mr Collins feels they are very elevated prices for the hundreds of units in these buildings, which for the majority part are not boutique growths.

"I think a boutique building on a pure beachfront could hold up this price point although these are mass-market products at very high price points comparative to the marketplace.

"Though it's fair to declare that the latest product coming online is undoubtedly a development in terms of excellence and perception design over the accessible supply, so the market is becoming more and more complicated and contemporary which will lend a hand.

"The fundamental concern is that worldwide we are observing property prices go down in most marketplaces together with Asia, and it may turn out to be quite a confront for the Pattaya market to resist that movement."

Occupancy Rates Plunge with Concentrated Spending By Multinationals

Three international property agencies look forward to Bangkok's rental market to drop by 5-10% in 2009 when multinational firms start to cut spending as their head office operations suffer under the effect of the global economic crisis.

Colliers International Thailand's managing director said command for office space; serviced apartments and retail space had dropped extensively in the present quarter as US and European multinationals were beginning to postpone business development around the world, together with that in Thailand.

"Our consumers are trying to cut their office space to save money, and a few are moving from grade A places to grade B," he said.

The occupancy rate of serviced apartments has also dropped in the final quarter of 2008, with foreign firms cutting staff or lessening allowances for their housing.

The viewpoint for 2009 in Thailand's industrial estates is alike. Multinational companies, particularly those in the auto industry, are likely to decrease investment in spreading out, and this will drag down command for industrial space.

"In our business vision, Thailand's commercial property sectors, together with industrial estates, office space and serviced apartments, will undergo a direct pessimistic impact from the global economic crisis," he said.

Jones Lang LaSalle (Thailand)'s managing director said the global economic crisis had already started to affect Thailand's property market, specially high rise housing projects and commercial projects.

As per the company's research, rental fees for office space cut down in the present quarter from an average of Bt616 per square meter per month for grade A office space earlier in 2008 to Bt600. In the meantime, office space is likely to be in noteworthy oversupply in Bangkok in 2009. Latest office buildings with a total of 200,000 square meters of floor space will be finished concurrently the new government centre at Chaeng Wattana opens its doors with 400,000 square meters of office space.

Jones Lang LaSalle also predicts dropping demand for office space as multinational firms trim costs by choosing smaller, or cheaper, floor space.