Investment Activity Delays as Purchasers Hold Out For Price Reductions

In spite of constant awareness and additional properties available for sale, investment activity in the Bangkok real estate sector is not showing much positive response because price expectations of purchasers and sellers are far apart.

Investment interest in the Bangkok real estate sector continues to be strong; although, investors are mostly interested in distressed assets made available at discounted rates. Though, sellers don’t want to sell their properties at loss, even though they accept that the market conditions are not up to the mark. Consequently, investment activity in the Bangkok real estate sector has declined as purchasers like to adopt a wait-and-watch attitude, hoping prices to go down in response to the sensitivity of assessment.

In the past few months, it is observed that investors are much more interested in large land plots, office buildings or industrial properties in and around Bangkok.

At the same time as purchasers are looking forward to obtain a property at a much discounted cost, sellers have not yet met with the financial situation which would compel them to acknowledge losses on selling of properties. Up till now only a few landlords are ready to cut their asking prices.

The property values are sliding downwards. Although, the size of the decrease in property rates is very tentative. In the past 2-3 months only a few property investment transactions are recorded.

The government of Thailand has promised to begin a new tax on unused land in an endeavor to expand its revenue collection.

At the same time as the government will take approximately 2 years to plan this new property tax structure, a few developers have expressed distress over this plan, which mean more and more burdens on landowners.

Major developers now believe that investment activity in the Bangkok real estate sector may delay as purchasers are adopting a wait and watch attitude in anticipation of price reductions.

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.

Prices Shoot Up In Thailand and Some Developers Change Center of Attention

Thailand prices shoot up and a few developers in Thailand have changed their focus from overseas property owners towards local Thai property owners. Simultaneously, the southern areas of Thailand have observed skyrocketing property values a short time ago.

Land prices in southern Thailand have increased by approximately 85% to 90%, as per a report released by Thailand Treasury Department. The average hike in property values in the southern areas of Thailand in 2007 has been 85.79% which is a large hike particularly when compared to the countrywide average hike which is a quite less at 26.9%.

This is mainly appealing in light of the truth that property values in the capitol and major Thai city of Bangkok have only observed an average price hike of 5.76%. Although it is an appealing duality, all at once it is to some extent understandable by the reality that property values in Bangkok were already quite higher than those in the rural south, with a lot of properties in Bangkok being valued at 500 to 1000 times the price as properties in same size in the south.

On the other hand, the rise in property values has also come all together as a rise in the common strength of the baht. The baht is the major currency of Thailand and for the past five years as per the data mining efforts on the part of various companies the baht has observed a 20% boost in value.

Though the raise in value and the growing financial system is excellent news to the average person in Thailand, it is almost certainly not that great news for somebody that had been taking into account investing in the Thailand property market. Foreign property investments have decreased as the double whammy of increased property values and a stronger baht currency (particularly contrary to a ruthlessly diluted American dollar) has resulted in a spectacular ventilation of foreign investment into the country’s property market.
This has driven several developers, like Japanese developers making up the Saha Group, to turn down investments in building up overseas investment property markets for expanding their holdings within areas more probable to be owned locally.