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.
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.
Labels: real estate, world economy
0 Comments
Posted by Moveandstay
|
