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.

Credit Crisis Care for Thai Property Market in the Long Term

The credit crisis may be piercing across the globe but as per the property investment specialists it is a first-class thing for Thailand. It isn't disturbing people straightforwardly although an oblique effect is possible to be sensible valuations and so long term constancy for investors.

This is excellent news for those who are interested in investing in the second biggest economy in Southeast Asia. Moreover, after 15 months of military rule, the new Thai government is in reality laying out a lot of enticements for investors.

"While the credit crisis may not be disturbing Thailand openly in terms of its citizens being foreclosed upon, it is having a direct effect on the sum of money flowing into Thailand, as per a report from real estate agents CB Richard Ellis.

For instance, Singapore and Hong Kong which were both noteworthy investors in Thailand have sub-prime responsibilities, as does the US, an additional strong investor in the past.

Although the report also points out that from the time in 2003, when there have been price hikes of up to 12% in the luxury condominium market in Bangkok, and now that there is a lack of property under construction and coming to finishing point, these price gains could not only carry on but potentially get better.

Normally the credit condition worldwide is regarded as having sobering outcome on the Thai market which prefigures well for its long term health. The Bank of Thailand has forced such limitations on lending that it's having a direct effect on property assessments and as per Scott Bolls from Smith Hodgkinson auctioneers, appraisers and valuers, this has brought practical assessments to the Thai market which will defend it over the medium to long term.

There are a couple of other problems that would-be investors should be responsive about in terms of property in Thailand – there's the truth that time and again projects are announced but never released. Moreover there is the truth that there is a need of liquidity across the country disturbing everything from fresh project starts to customer activity – this will have a real effect on the expansion of the property market and effect on an investor or in any case their chosen policy for profit.

Demand For Condominiums in Central Bangkok Remains Strong Although Fails to Maintain Speed With Supply

Sales of condominiums in central Bangkok have decreased equally in the luxury and non luxury segments. Though, the average demand continues to be on the positive territory as a number of fresh projects that were launched in 2007 were in the high-end segment.

There are at present 47,500 condominium units in central Bangkok. An added 12,160 units are in projects which are under construction. At the same time as completed buildings gets the average sales rate of 98%, projects which under construction and those that are being revealed from blueprint are attaining the average sales rate of 66%.

As expected, circumstances of the condominium market in central Bangkok have alleviated with the average sales rates decreasing. This is not the consequence of weakened demand although the quick growth of supply which demands could not maintain pace with.

while the market outlook for 2008 is less clear than 2009 due to the increasing interest rate that is likely to deteriorate buyers’ spending power, we remain hopeful that the market in general would not face any major crash, provided that most of the accessible developers in this sector are well skilled and can make out what their targeted consumers are searching for.

There have been approximately 6,000 fresh units launched yearly in central Bangkok over the last three years at the same time as around 5,500 units in both completed projects and projects that were freshly launched were sold every year over the same period.

Back to central Bangkok, there are at present 5,300 units left over unsold. In theory, if there were no fresh condominium projects launched in 2008, and demand keeps on at the same level as in 2007, all of the left over units would be sold by the end of 2008. Though, the truth is some of the left over units are those that do not meet customer's necessities and would not be sold straightforwardly. In addition, there remains several fresh projects that are about to be launched into the market in 2008.

With decreasing sales rates, many developers have implemented exceptional price campaigns or price discount policy to sell the left over units.

Demand Base of Foreign Home- Buyers Increasing

The high-end and luxury condominium market in Phuket reported high sales in the tourism season in 2008. At the same time as buyers from UK, US and the Scandinavian nations keep on to produce the main demand, the demand base has been extended by the improved concern of buyers from Russian, the Middle Eastern and Asian countries.

A study has been conducted recently of the high-end and luxury condominium market in Phuket of prices ranging between THB 92,000 to THB 128,000 per sqm. The study paid attention on the sales activity over the peak tourism season i.e. between November 2007 and March 2008.

Findings from the study illustrate that the supply of high-end and luxury condominiums augmented by 13% in terms of the number of units being promoted to just more than 700 for the peak season. Projects being promoted in the high-end and luxury segment are normally small in scale in comparison to the broader market, with an average of 38 units per development or segment. Individual projects present as less as 12 and as many as 100 units under master plans.

Out of the promoted units, around 56% had been sold by the end of the peak season, with foreign buyers making the most of the purchases. Contrasting the urban centre of Bangkok where Thais corresponds to a considerable portion of demand in most condominium projects, the resort market of Phuket draws mainly foreign buyers, who benefit condominium units on both freehold and leasehold terms. At the same time as usually the bulk of these foreigners would be British, American or Scandinavian nationals, wealthy individuals from China, Russia, India, Korea and the Middle Eastern countries are representing a rising source of command. This tendency is reflective of the increase in the number of tourists from these markets.

Approximately 73% of the units sold were situated in Phuket’s West. In the same time, rates per square meter in this area increased by 5.8% on average before the peak season.

Outlook for the Phuket high-end and luxury condominium market continues to be promising. The increasing reputation of Phuket as one of the world’s top resort destinations will keep on drawing buyers from all over the world searching for a holiday or retirement home overseas.