LH Chief States Slowdown Is Unavoidable

Thailand's property market is just going to slow down, regardless of a downward drift in construction costs, oil prices and interest rates, as consumer confidence is receding, says Anant, the chief of Land & Houses Plc, the country's major residential developer. He said the global economic crisis had increased concern among lenders, even healthy ones, and mortgage refusal rates would climb accordingly.

The credit crunch will also decrease demand by foreign consumers. Investments by foreign funds would vanish as investors need liquidity, he said.

In addition, he said, a few developers would find it hard to develop business by drumming property funds, warrant issues or project finance, thus only large developers would stay in the market.

''No one has said they would spread out investment in 2009,'' Mr Anant said. As a consequence, supply of fresh developments will be concentrated, the same as will be the number of lively developers.

Mr Anant said the country's financial system required to be inspired through more government investment, at the same time as the private sector should carry on investing if achievable. Most significantly, he said, the Bank of Thailand should not be concerned about price hike and should decrease interest rates so as to motivate investment.

Everybody says the country's economic essentials are excellent although we should look forward. What will come about subsequently?''

Mr Anant said the country had suffered approximately four years of political improbability and tension that had damaged the financial system. ''We have paid too much consideration to politics and every sector apparently has become of poorer quality.''

He anticipates no scrupulous show up segments in the property market in 2009. The condominium market has detonated in current years as high oil costs encouraged consumers to look for homes nearer to their workplaces in the city, however with oil prices falling quickly, condo sales could cool.

Though, Mr Anant considers that luxury property priced at 20 million baht or more would not be affected as wealthy consumers had cash and savings.

Bangkok Property Market Expects Impact of Incentive Measures

Regardless of the successful formation of the new government and the launch of policies to improve the Thai economy, peripheral factors like increasing fuel prices and the global economic delay continue to surpass economic forecasts in Thailand. Emotions in the property market have afterward remained depressing with the deliberate growth of demand in major property sectors.

There was a probability that the Thai economy would develop following the formation of the new government. The same anticipation was set in the property sector where demand depends mostly on economic conditions. Although the government and some economic houses adjusted the economic growth protrusion for Thailand growing, the agreement is that the Thai economy improved at a moderately slow rate in the first quarter of 2008. In addition, it has also been depressingly exaggerated by a number of external factors -- be it the fuel price crisis or apprehensions over the global economic slowdown. These incidences have a negative attitude on the demand in the property market, both in the residential and commercial segments.

Fuel price hike continues to hit real estate

The continued hike in fuel prices has persistently hit the property sector in various ways. On a bigger scale, it is motivating the cost of living in Thailand to increase considerably. This will certainly affect demand in the residential sector as consumer spending power is concentrated and buyers are more careful to be dedicated to loan burdens.

On a smaller scale, the fuel price hike has increased construction costs. It is expected that construction costs in Thailand increased by 15% on average in 2007, due to increased costs of construction materials because of the fuel price hike.

An instant impact of the increasing development cost has been considered in the residential sector. For instance, the average selling prices of condominiums in recently launched projects in central Bangkok increased by 15% from the same period of 2007.