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.
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.
Labels: condominium developers, condominium market, Thai property market
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