Property Firms Crunch Into Bitter Pill

Property firms will experience hard times in the last quarter of 2008 as homebuyers may holdup their resolution to invest in residential projects opening in the third quarter, as per a research by Asia Plus Securities.

Asia Plus Securities senior executive director Therdsak Thaveeteeratham said financial consequences in the third quarter of property firms programmed in the stock exchange will be well again compared to the same period in 2007. Though, the third quarter act will be lower than the second quarter in 2008 as homebuyers are holding up their resolution to purchase residential projects, worried about their upcoming earnings once the global economic calamity hits Thailand's financial system.

As per the research by Asia Plus Securities, 6 out of 12 property firms will declare lower net profits of about 12 %- 62 % in the third quarter of 2008 compared to the second quarter of 2008. Preuksa Real Estate will keep its net profit in the third quarter similar to that of the second quarter of 2008.

"We predict that their net earnings in the third quarter will be poorer than the second quarter as nearly all recorded presales in the third quarter of 2008 is lower than the second quarter of 2008. For the time being, demand for residential projects has decreased considerably, even though the government may choose to extend its tax incentive time limit for property from March 28, 2009 to March 28, 2010," he said.

He further declared that 31 property firms had confirmed presales of Bt28.12 billion in the second quarter of 2008, a decrease from Bt30 billion in the first quarter of 2008.

The company also predicts that their presales in the third quarter will be approximately Bt25.8 billion, an 8% fall from the second quarter of 2008. That reveals the government tax incentive was not sufficient to encourage home purchasers if they were worried about their upcoming earnings. This will affect economic consequences in the third quarter of 2008 and may have an effect on the last quarter of 2008 when the country's ongoing political insecurity and the global economic hold back start to hit the Thai financial system.

Dazzling Expectations for Green Building

Approval of green real estate practices in marketable and residential buildings presents very lucrative Green House Gas (GHG) emission cuts in contrast to other financial sectors. This is one of the major conclusions in a Green Real Estate Guide gathered by global real estate services company, Colliers International.

Mr Simon Carter, author of the Guide and Colliers International Regional Head of Sustainability for Asia - Pacific, reached Bangkok a few days back to talk about international best practice and modern trends in green design with neighborhood architects, designers and developers.

“On a daily basis we are observing the effect of global warming in weather patterns all over the world,” said Mr Carter. “With suburban and marketable buildings representing up to 15.4% of greenhouse gas emissions, we look forward to governments and economies will rapidly turn to buildings to attain deep emission cuts promptly.

“At the same time as the move to green buildings has just started, real estate markets in Asia and the world are expected to change promptly, adopting green standards both in developing fresh buildings and improving accessible ones.

“The expertises of green buildings and their capability to work competently have now been established in different locations all over the world. “

Colliers International Thailand Managing Director, Patima Jeerapaet said the Thai Government had approved the Kyoto Protocol on Greenhouse gas emissions, although had not accepted detailed targets for emission cuts.

“Currently there is a policy environment of hushed support, however there may be a requirement for the more substantial incentives and clearer rules comparable to those accepted in other countries, if Thailand is to maintain pace with other markets.”

Ms Patima said proposals by companies like Tesco Lotus, which has constructed two ‘green stores’ in Thailand and has an extensive energy management program in its facilities supervision, have verified the business reimbursement that is achievable from following green practices.

“The winners in the budding ‘carbon economy’ will normally be those who organize early. We believe progressive developers and landlords are now organizing themselves to show the way, before follow, the change that is imminent”.

Thailand Property Awards 2008: Sensations

The winners of the 2008 Thailand Property Awards were opened before 550 real estate and business executives in a prolific ball dinner at the Conrad Hotel at the weekend.

All in all there were eight winners from Bangkok, six are from Phuket, two are from the Eastern Seaboard, and two are from Samui and three are from Hua Hin.

This is the third year, the Thailand Property Awards make out not only the winners of every award, however also emphasized the high customary of Thailand’s real estate industry all together.

Raimon Land got the apex award for Best Developer at the occasion, at the same time as Best Boutique Developer was given to Aleenta developers KIJ Development Co. Ltd.

Gulu Lalvani, Chairman of the Royal Phuket Marina, was chosen as this year´s Real Estate persona of the Year. It is the first time a Phuket developer has got this honor. The winner is not dependent on the similar entry procedure as the other 20 awards, although determined by Property Report Thailand.

“This year has been quite more viable than earlier years. Over 360 companies were chosen and they got more than 250 entries,” Duncan Worthington, Managing Director of organizers Ensign Media Co. Ltd, said.

“It feels fantastic to see so many admirable winners from all over the country, and lots of fresh winners in 2008. To guarantee complete neutrality in the nomination, entry and judging procedure, we affianced BDO Richfield Advisory Limited, a leading international accounting and consultancy firm to supervise the complete procedure,” said Worthington.

To recognize the exclusive distinctiveness of every regional market in Thailand, the villa and condominium categories were divided into five distinct provinces: Bangkok, Phuket, Eastern Seaboard, Samui and Hua Hin, said Worthington. The Best Print Advertisement award was also launched.

Raimon Land also succeeds in acquiring best development website for www.theriverbangkok.com and best condo development award for The Heights (Phuket).

A KIJ Development spokesperson said it was a pompous minute for the company that replicated leading the hard work and efforts of their employees.

This Is The Correct Time To Acquire Property In Phuket And Thailand.

With the worldwide financial markets in such hysteria, lending seizing up between banks and institutions and common panic and insatiability saturating the market, there seems little cause to be hopeful.

Therefore, when is the best time to acquire real estate in Thailand? At present? Humorous you should state it. The safe heaven for those with ready money is obviously not in the equity markets – not at present. Surprisingly there is even some amount of concern being expressed about leaving hefty amounts of cash with a single bank and in low interest rates. Not many appreciate the complication of other investment vehicles and most prefer to invest and leave it on time and not have to watch it every five minutes. So, investing in a property would be the best preferred option.

At times, the straightforward ideas are the finest. "What's the use of cash to me?" remarked one consumer. "I am much more affluent in property and at least I can make out that it's there and can't vanish".

Well that is one approach to view it. Then think a bit deeper and you will make out that property in Thailand, mainly in the resort markets like Samui and Phuket are generally not financed by means of mortgages or safe loans. Specified the temperament of the market, it is a cash purchase. No loans means far less evasion on any property that is financed.

The lone provider to price shifts is the primary market movement of supply and order. In other words, there is a level of constancy in resort market property in Thailand as there is less liability. It has endured financial crisis, tsunami's and SARS. The maximum number of property has been purchased by cash as the local banks do not loan lightly to outsiders. Thailand banks have been conventional lenders, spending time as the last economic crisis to clean up the balance sheets and stay away from risk. None are out in the open to sub-prime.

Not just are the markets of Phuket and Samui comparatively stable although there are prospects to buy properties with a definite yield.

South East Asia Property Market Expected To Withstand the Global Recession

Certain Asian markets are flexible enough to withstand global recession. Asia is well placed to withstand the global finance and property recession.

South East Asia's property markets are not protected however they are more probable to be pliant to the US sub-prime catastrophe and knock-on financial meltdown.

“No one can descend scot free from what's taking place, as global liquidity has been concentrated and also the feel-good issue has gone,” said David Simister, chairman of real estate company CB Richard Ellis Thailand.

“It will definitely create a hold back and a market where for the coming18 months it's a terrible time to be selling something although I don't expect a condition where there will be a big slide in costs,” he added.

Analysts consider that the 1997 Asian crisis forced regional banks to reduce their loan practices to the real estate sector and, with the exemption of Vietnam; nearly all Southeast Asian countries have not faced the similar real estate booms observed in Asia's increasing giants China and India.

These two factors represent Southeast Asian banks, which were stumbling with non-performing loans to the property sector following 1997, are in comparatively good shape.

“I believe Southeast Asian banks are still less exposed to real estate than Northeast Asian banks, said Peter Tebutt, senior director of financial institutions at Fitch Ratings in Hong Kong.

In places such as Phuket property is continuing to sell in good health, particularly at the high end of the market. Overseas property investors are still demonstrating a lot of curiosity. There's lots of Middle Eastern money that needs to extend into new rising markets.

“The division of the market that is reliant on mortgaging the family house and using the difference to purchase a property in a resort is going to be influenced,” said Simon Landy, managing director of Primo Company, a real estate agent in Thailand.

Developers Move Concentration to Smaller Projects

Property companies have modified their policies and will build up smaller residential projects to accelerate their sales in the last quarter of 2008 until 2009 for the reason of the pessimistic impact of the country's political chaos and worldwide economy slump.

Preuksa Real Estate chief executive Thongma Vijitpongpun said the company will modify its business plan to start on small residential projects with 100150 units.

"We want to boost our sales and cut down the construction procedure to produce more cash flow, which will help us build up other projects. This appears to be a better alternative than developing large scale projects," he said. He said the company's presales might be lesser than the predictable target of Bt20 billion for 2008, as the first nine months got presales of only Bt14 billion.

Because of the political inconsistency in the country, home purchasers have postponed their resolution to get residences in the third quarter of 2008. The global economic recession has also influenced their poise and the trend is likely to carry on until 2009. Consequently, Preuksa has had to modify its business policy and shift focus to build up small sized projects, he said.

Land and Houses senior executive vice president Naporn Soonthornchitcharoen said his company would go on with the launch of 15 residential projects of value Bt12 billion in the 2009 although build in areas situated near to mass transit. It will build up small projects to increase sales and sustain cash flow, he said.

Thai developers have understood that cash flow is the mean to exist in the financial calamity. To sustain enough liquidity, they will have to regulate construction dealings, and make them shorter and quicker.

"Our business policy will concentrate on reducing inventory and launching small projects in the final quarter of 2008 and in 2009, which will help us increase sales and produce more cash," he said.

Real Estate Assistance May Last Longer

The Finance Ministry may broaden tax and fee-reduction spurs for real estate purchases after March 2009, said Finance Minister Suchart Thada-Thamrongvech.

Real estate associations submitted an appeal for an expansion recently, together with other applications; as well as one that the Bank of Thailand slashes interest rates in line with other reductions in the region.

They also advised the government to accelerate investment in mass-transit projects and to support commercial banks to slow down sanction conditions for home loans.

Dr Suchart said the real estate tax spurs were set to terminate in March however the ministry would think about their extension as real estate is a key sector in motivating financial growth.

On March 4 the government declared a decrease in the particular business tax from 3% to 0.1%, in transfer fees from 2% to 0.1%, and in mortgage fees from 1% to 0.1%.

The minister said the real estate feared an impact from the weak financial circumstances. Exclusive of additional government encouragement, the industry has a goal of 74,000 recently registered residential units in 2008.

He also said that Thailand's policy interest rate should be in sequence with others in the area. He added that demands from price rises and increasing oil prices had relieved and countries in the areas like South Korea had already decreased their policy rates by 0.75% points.

He also advised commercial banks - while shielding themselves from the worldwide financial meltdown - to slow down conditions for discharging housing loans. He said these loans carry lesser threat than other types of credit as they are protected by property. Applications should as a result be well thought-out by banks in an "undemanding manner."

The government is at present at the bidding stage for building up the Purple Line and look forward to open bidding for the Red and Blue lines in 2009.

Dr Suchart said the government had tried to set up buoyancy in the country's financial system with the application to expand the Deposit Protection Act's 100% deposit guarantee for three years from 2009.

Property Projects on Track

Two property developers, Major Development Plc (MJD) and Ananda Development Co Ltd, have been persistent that their joint ventures with the top insurance firms AIG and Prudential are protected from the global financial crisis as the finances were raised in Asia.

MJD president Suriyon Poolvoralaks said his company's subordinate MJAI Development Co had been created by a joint venture between MJD and AIG Global Real Estate Investment (Asia) in the beginning of 2008.

He said finances were raised by AIG in Asia for supplying in the real estate market in Asia, together with Thailand. MJAI has by now invested in Royce Private Residences as its initial Thai residential project and more investments may go behind, he said.

The 3 billion baht Royce Private Residences, consisting of 165 units on a three-rai site on Soi Sukhumvit 31, has been funded by Tisco Bank and the supplier Seafco started piling work on the site in September 2008.

Mr Suriyon said the project was going as per agenda and a replicate room and sales office should be open by October 2008.

He added that the AIG fund was "very optimistic" regarding the Thailand market and was eager to invest more, even though it had by now finished its investment in Royce at the beginning of the project.

Ananda Development Co chief executive Chanond Ruangkritya said its subordinates Ananda Development One Co Ltd (Ananda One) and Ananda Development Two Co Ltd (Ananda Two) were combined ventures with TMW Asia Property Fund I operated by Primerica Real Estate Investors, the real estate investment advisory business of Prudential Financial Inc. "despite the fact that they are move down from US-based Prudential, TMW's funds are raised from investors in Asia. The majority are pension and oil funds," he said.

"Prudential is very conformist and not in the business of guaranteeing collateralized liability compulsions (CDOs), which caused the global credit crisis and the predicament for Lehman Brothers."

Samui Turning into 'Boutique' Hotspot

Koh Samui is hovering to turn into Asia's ''boutique island destination'' with limited properties with characters dissimilar from resort destinations like Phuket, as per the real estate consulting firm CB Richard Ellis.

Prakaipeth Meechoosarn, manager of CBRE Samui, said developments on Samui were controlled, even though more local and foreign players were getting involved, the island continued to be an elite destination for tourists in search of a quieter, more isolated retreat.

There are only a few numbers of condominiums in Samui, and a fresh survey of the sector revealed that 70% of the total accessible and future supply of just about 500 units was still under construction.

The northeast area of the island (Choeng Mon Beach) financially records about 38% of total accessible and future supply, followed by the north (28%) and the east (25%). 59% of units were sold by the end of second quarter of 2008.

Costs of condominium units on Koh Samui range between 1.8 - 48.7 million baht per unit, with an average of somewhat 10.4 million baht.

Villa supply is in the same way inadequate, with approximately 550 accessible and future villa units spread in 41 projects. The north and northeast coasts have been established and being admired for villa developments, with 21 projects accounting for 40% of entire unit supply, followed by the west (17%) and southwest (14%). 44% of the total obtainable and future supply had been sold by now in the second quarter of 2008.

In the long run, CBRE considers, the high-end and luxury segments of the Samui property market will do better than the market overall. Coastal land costs have been on the mount and prime plots are getting uncommon.

''Land cost movements will play a noteworthy task in the pattern of development on Samui, as will the constant development of infrastructure and other support services,'' said Ms Prakaipeth.

Property Market in Phuket Is Hardly Affected By the Current Political Situation

In spite of the shutting down of Phuket International Airport for two days, real estate experts in Phuket claim their industry is not likely to be influenced as foreign consumers know Thailand's political circumstances.

Martin Phillips, based in Phuket as managing director of the upmarket residential brokerage Engel & Volkers (Thailand) Co, said no customers had deferred purchases regardless of the circumstances being international front-page news. Thailand was not unaccompanied in facing political problems and that these conditions time and again takes place in Europe.

''This is not strange and these are generally short-term disturbances, much the same as the momentary closure of Phuket,'' he said.

''We do not feel that the political circumstances will have an effect on property purchases in Phuket as most consumers in Phuket are foreigners who are familiar with Phuket and know Thailand to a certain extent. We consider the demand for Phuket properties will not fall owing to this,'' he said.

Although Mr Phillips added that current political improbability in Thailand was not obliging to business normally or to the resort property market, which would do well from an environment more favorable to investor confidence.

"As this is a domestic concern, and has so far stayed quite diplomatic, it regrettably will not be viewed optimistically across several sectors, not just resort property,'' he said.

Patima Jeerapaet, managing director of the consulting firm Colliers International Thailand, said Thailand required to correct the country's image right away to support foreigners about the generosity Thai people generally make available to foreign guests.

He said foreign investors were still certain about the basics of the Thai economy, which were much enhanced than those of its neighbors like Vietnam, Cambodia and Burma.

He confessed that a few foreign investors might holdup purchases, however said investors who realize the theory of high-risk, high-return were still coming across to invest in Thailand.

Koh Samui Changing Its Position in Property Sector Quickly

For a small island, Koh Samui is producing a lot of noise in the property sector quickly changing from a "budget-back-packer" destination to a high-end retreat which seems set to adversary sister island Phuket. As the seashore property markets in Phuket and Pattaya grows to be gradually more costly and more saturated, people are moving to Samui, which is Thailand's third biggest island.

Property agents estimate investment in Samui is mounting at around 20 % annually and the current service of the island's image has fascinated a more prosperous set of visitors.

Samui property has developed into a multi-level market, presenting renters and consumers with a collection of property alternatives from high-end villas to estate developments.

Mr Andreas Pfiffner of Koh Samui Properties said that land and apartments are still the most desired mode of investment in Samui although he added that gated communities are also being taken into contemplation as they are now growing in number.

One of the island's potency is that it is gifted with immense natural beauty. The most admired and developed beaches are at Chaweng and Lamai on the east shoreline. These beaches are loaded with apartments, gourmet restaurants, nightspots, luxury spas, shopping and commercial services.

Bophut and Maenam, are nearer to the airport but hushed than the more inhabited beaches.

Samui is famous as a centre of healing with a profusion of spas, retreats, rumination centers, fasting and cleansing programs, reiki and hands-on healing masters.

The presence of Bangkok-Samui Hospital has also lifted the island's profile. Rising numbers of guests are either investing in a holiday home or choosing it to make Samui their home-base.

Star International Real Estate has an apartment in Coconut River up for sell. The apartment has three bedrooms and two bathrooms with all bedrooms and the living room being air-conditioned. The apartment is perfectly appropriate to provide accommodation to larger families of up to six if necessary.

M.K. Delays Condominium Development Plans

M.K. Real Estate Development will give attention on developing low-rise apartment projects after the termination of tax incentives next March, and is holding up plans to bigger scale condominium projects, says assistant managing director Chutima Tangmatitham.

“The tax incentives helped get better demand for our apartment projects in the first half of 2008 as homebuyers got tax reimbursements”, said Chutima.

On the other hand, because of the harsh environmental impact appraisal rules, elevated construction expenses and lower margins when compared to low-rise apartment projects, the company is not preparing to get underway any high-rise condominium developments in 2009, although does look forward to start 3-4 low-rise apartment projects worth a combined value of Bt2 billion.

M.K. Real Estate Development has already purchased a number of land plots for the new developments and is at present in talks for others.

M.K. Real Estate Development has a sales accumulation of approximately Bt1.6 billion baht, among which the company looks forward to clear around Bt1.4 billion this year in 2008. The developers has attained revenue of around Bt1.48 billion by now in 2008, which is more than half of the Bt2.7 billion sales target for the year 2008.

After a heavy first half of 2008, the Thai property sector is beginning to rise up, and will record growth somewhat between 5-10 percent, says Thai Real Estate Association president Somchao Tanterdtham.

"In the first six months, the real estate industry has not done well for the reason of economic volatility and high inflation, which have increased the level of hesitation in the minds of customers," Somchao said.

Many consumers are keen to purchase this year on the probability that prices will rise considerably in the next few years due to high inflation, elevated construction costs and the increasing costs of raw materials.

A lot of property developments that had been built last year are still sensibly priced for the reason that developers earned lower costs then, although they are beginning to surrender as the market knows things will happen to be more expensive in 2009, says Somchao.

Global Direct Real Estate Investment Likely To Be Down By 30% In 2008

After a record year in 2007 for direct real estate investment globally, with volumes up 8% every year to US$759 billion, Jones Lang LaSalle has observed on the stances for 2008 in its latest Global Real Estate Capital report. The firm estimates global investment market volumes for 2008 to be low by 30% on 2007. The Americas and European investment markets will definitely see a solid decline in full year volumes and, though Asia may be more flexible, volumes will not attain the heights of 2007.

Decreased debt accessibility and investor confidence would continue for much of the first half of 2008 as the impact of the debt squeeze keeps on to flow through markets, and central bankers and financiers work to alleviate and encourage the debt markets. The circumstances are being aggravated by agitation about the global economy, especially about major economies like the US, the UK and Japan.

Jones Lang LaSalle sees several factors that will hamper volumes this year; consumers and sellers adopting ‘wait and see’ policies; prices having sharp in 2007 in a lot of major markets; a misalignment between consumers and sellers’ price prospects; decreased accessibility of debt, tougher lending decisive factor and improved debt costs; decreased enthusiasm and ability to transact large lots sizes, a narrower range of investors; and more demanding due conscientiousness which leads to longer transaction processes.

Mr Horrell notes, “Though, we do not look forward to a planned and intended withdrawal of capital from real estate in 2008, or investors to considerably adjust their shares to the asset class. Forecasts for 2008 continue to be positive and the long-term trends in real estate, like the growing reliability of real estate as an investible asset class, improving precision, urbanization, and limited supply, continue to be encouraging drivers.”

At the same time as domestic investment stayed somewhat around US$400 billion internationally in 2007, close to 2006 volumes, cross border investment raised by US$58 billion to $357 billion in 2007 and of that, inter-regional investment ended up as US$242 billion.

BAHT Strength: Allusions for Real Estate Market

The fast increase in the US dollar-Thai baht exchange rate has mostly been considered as limitation of the US dollar around the globe, and in recent times by continued inflow of foreign capital to Thailand, mainly by means of the stock market. Thai baht power has not only turned out to be a major fear for exporters, although also has allusions for Thailand’s real estate sectors.

At the same time as some economists support the government to decrease interest rates more in effort to restrain the baht strength, low interest rates would facilitate property developers held back with borrowings. They would also do good to the residential sectors as credit for home purchases will be inexpensive for buyers. Though, we hope that the impact of the strong Baht would be more depressing than optimistic on the real estate sector.

With domestic utilization, investment and government expenditure slowing in these time of political turmoil, growth of the Thai economy has basically been determined by exports. As conditions for domestic factors are likely to get better if political issues are resolved over the medium term, the near term position continues to be damaged by the risk the strong baht creates to the export sector.

The industrial property sector is probably the sector most depressingly impacted by the strengthening of the Thai baht. Regardless of high capacity consumption rates, manufacturers, mainly those in the export sector, come out reluctant to invest further at this time, in part because of apprehensions that further approval of the currency will break their competitiveness in global markets.

Besides manufacturing, the stronger Thai baht has reduced the pleasant appearance of residential and resort real estate in Thailand. A lot of of these properties are targeted at foreigners either residing in Thailand as a second or retirement home, or for vacation intentions. These overseas buyers have been getting a smaller amount for their dollar as the domestic currency has strengthened.

The similar trend applies to real estate from a broader investment viewpoint. Although Thai properties still appears cheap compared with similar product in several other markets around the Asian Pacific region, the prices have increased considerably when quoted in US dollars.

If foreign investors make a decision to get hold of real estate assets in Thailand now, they may have to pay around 8% more, comparing to the beginning of 2008, due the baht positive reception.

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.

Oil Crisis Affecting Real Estate in Thailand

This is not the first time that an oil crisis is affecting the world economy. Though, it is the first time that the inflation-adjusted cost of a barrel of crude oil has broken a record of rising above US$120 (Bt 4,014). Number of professionals look forward to a figure above $150 per barrel in the second half of 2008, indicating a world downturn.

Even though the government several efforts to encourage the real estate sector in the beginning of 2008, the downbeat impact from higher inflation, rising interest rates, increased material costs and loss of customer buoyancy as a result of the oil crisis and political unsteadiness will take the sector into negative territory.

Increasing construction expenses will show the way to lesser margins for developers who have sold their projects in 2007 and have not started construction because of stricter ecological rules. A number of developers may make their mind up to return deposits to their consumers. On the other hand, home-buyers will get a chance to purchase lower-cost apartments when they search for projects that are impending completion.

Looking at the optimistic side, the Asian economic crisis shows the way to banking reforms. Bank of Thailand observed the real estate sector very closely and commercial banks cautiously approved loans in the past few years.

The major developers have become stronger in comparison to the circumstances prior to the last crisis. Minor developers have turn out to be weaker. As a result, mergers and acquirements might be the way out for their endurance after this crisis.

Value of Real Estate Market in Thailand Decreasing

The value of the local real estate market in Thailand is expected to fall down to some extent of 10% in 2008, mainly due to lesser self-assurance among home-buyers and a bit increase in the Thai economy, as per research conducted by a number of property agencies indicates.

Sopon Pornchokchai, the managing director of the Agency for Real Estate Affairs, explained that the predictable decrease in requirement for new apartments was because of home-buyers' apprehensions related to the country's security. He said they did not feel liable to visit new residential projects to search for a new apartment at this point of time.

For the time being, construction has been postponed on approximately 111 new apartment projects that were formerly announced would launch in 2008, as the concerned companies are waiting to make out what the local political and economic situation will be like.

Sopon considers that the market insecurity will make the local real estate market to fall down to 10% in 2008 in terms of cost and 5% in terms of unit numbers.

The local real estate market has confirmed 66,510 units worth a total of Bt174.11 billion sold in 2007. Among that total, 21% were separate apartments, 27% town houses and 52% condominiums.

On the other hand, a research by international real estate advisor Knight Frank Chartered (Thailand) shows that requirement of budget condominiums will keep on increasing in 2008 also compared to other real estate sectors.

The research shows that new condominiums situated near mass-transit systems and costing at less than Bt2 million a unit will benefit from stronger requirement in comparison to luxury condominiums.

Knight Frank Chartered notified in the research that condominium projects located along Rama III, Sukhumvit, Ratchadaphisek and Sathorn roads would be in higher demand in comparison to ones situated in other areas.

Branded Apartments Entering Thailand's Real Estate Market

Well-known branded apartments are at last discovering their way into Thailand's real estate market, and they are rapidly drawing the interest of investors from other countries as a result of high levels of buoyancy they instigate and the influential status they offer.

Basically, world famous brands - generally five-star hotels in Asia - are getting associated with owners and property developers to deal with various components of residential projects to support the venture.

Buyers are paying attention to these famous branded apartments due to the safety, reliance and gratitude they posses; the reimbursements that come from their controlled rental and global distribution systems, and the better returns they can offer.

However comparatively new in Asia and Thailand, branded apartments are not so much unknown to the world real estate market, with Thailand's leading neighborhoods presenting eye-catching destinations for these kinds of improvements.

Nobody had ever seen earlier any venture offerings similar to this and these apartments are often sold very quickly. People are ready to pay a high payment for the name and the brand. It has truly set the market on fire.

Developers are a significant part of these housing projects, and hospitality brands have to be really very alert in choosing the right one, as there is a possibility of damaging their name and fame if the property doesn't meet the expectations of the brand's standard. They have to be persuasive and make certain that they will deliver a housing product that is as per the standard of the brand name.

Property dealers put on great importance on a developer's track record, and have raised their due assiduousness to stay away from developers who are amateurish in their move towards the international property market.

Branded apartments also draw demand because of the reliability linked with the concerned brands. This builds self-assurance amongst sponsors who are bearing in mind an off-plan purchase.

Bangkok's Real estate Market Overview

Bangkok is the capital of Thailand and also the biggest city of the country. Moreover, it is the fastest developing city in the entire region of Southeast Asia.

The diversified aspects of Bangkok's profit-making portfolio all together gained a GDP of approximately US$222 billion in 2007 which is around 45% of Thailand's total GDP.

Bangkok represents a much expanded and wide ranging real estate market. In Thailand, Bangkok is the biggest attraction for the tourists. Bangkok's property market runs mainly on the hospitality division. Organizations like the Peninsula Bangkok, Shangri-La Bangkok and the Oriental are good examples of the global hospitality market. So, Bangkok is the most profitable investment region in view of hospitality sector.

Bangkok's real estate market mainly apartment and office sector is certainly a traders market at present as there is a scarcity of fresh supply. The suburban property market can be categorized into three wide-ranging sections. The first is the Central Business District (CBD), in which one can get condominiums and second hand apartments.

The second category is near the border area, which is connected to the CBD by beautiful high expressways approximately 20 meters over the ground. Apartments and offices in this area comprise elaborately designed suburban villages or housing estates. These planned areas are characterized by a higher grade of surroundings and pollution free atmosphere are mostly chosen by emigrant homebuyers.

The third category comprises of suburban multi-storied condominiums and apartment buildings.

At the same time as the suburban property market of Bangkok keeps on raising its rates, there is one sector that appears to hit the norm and it is the second hand property sector, which Bangkok's Government Housing Bank is aggressively supporting with some really profitable incentives. Recently a second-hand home fair was organized in Bangkok in which extraordinary interest rates inclusive of noteworthy discounts were made available to the Non-performing Assets.