Housing Apartment Sector and Office Building Sector Are the Strongest Part of Thai Property Market

The property market of Thailand appears to be recovering, especially in the housing apartment sector and office building sector. The recent data gathered by a few government agencies revealed that Thai property market is revealing amazing positive growth trends.

Actually, there are more than a few factors that are in favor of the positive development of the Thai housing sector. Nearly 33% of the Thai population is in the age group of 25-44 years, which is a very excellent demographic for the local housing market, particularly in the middle-end sector of Thailand.

As per the figures gathered by a few government agencies, in the case of the figures for housing apartment supply, only a few segments of housing apartments were close to the maxim point that was achieved by the Thai property market in 1997, rest all the segments were comparatively in a very low stage.

The major problem of Thai property market is that the demand for housing apartments is still strong when taken as a demographic. Pre-built perceptions are not that much affective for big scale projects, as it holds back the company's entire procedure if the sales decline and this could have an effect on the total industry and the psychology of probable purchasers in Thailand.

The hike in oil prices, interest rates and building prices in Thailand had influenced the developers a lot who should now make certain that they had stringent monetary controls ready.

The executive director of CB Richard Ellis said recently that for the residential sector, there were more than a few factors which influence its act in the local property market, like inflation, land and construction expenses, and the level of tax and interest rates which will boost competition by the end of 2009.

Moreover, when we think about condominium projects, demand depends upon certain factors like:
1. The right project,
2. The right location and
3. A unique selling point.

The second half of 2009 is a tough time for property developers as they have to concentrate more on marketing and promotion to improve sales and market share at the same time as launching fresh projects.

Property Perfect Delays Condo Projects and Targets Low-Rise

One of the leading listed Thai property developer ‘Property Perfect’ recently announced that it is expected to delay investment in its two new condominium projects worth Bt2.75 billion which were expected to be launched in the first half of the year 2009. However, the property developer instead favors low-rise projects with a much shorter construction time frame.
As per Property Perfect’s director and assistant chief business development officer Sirirat Wongwattana, “We need to keep an eye on the market this year to make sure demand will resume. It’s too risky for large investments when consumers need to see finished products before making a decision,”

Announced in year 2008, the projects are to be located in Sukhumvit and Ratchada respectively. The first project could be put on hold for a minimum of two years depending on the economic situation, while the second project is expected to start at the end of the year 2009.

The developer is also expected to launch four new low-rise projects in 2009. The details are given below:

1. 402 detached houses in Ratchapruek
2. 321 townhouses in the Sathorn area
3. 114 detached houses in Ramkamhaeng and
4. 319 detached houses in Pattanakarn

Majority of low-rise construction projects have shorter construction periods, and as a result it allows the company to generate revenue more quickly.

New projects of the company are due to be completed by year-end and thus expected to realize about Bt1 billion from our new projects this year.

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.

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.