A report in the Bangkok Post recently quoted Patima as
saying: “If everything is calm soon, it will pick up in June as local demand
remains strong. But we cannot depend on foreign demand, as the negative factors
are not only the political turbulence but also the currency.
“We cannot say when foreign demand will pick up. There are
other factors like the world economy and natural disasters around the world,”
said Patima, also chairman of the Joint Foreign Chambers of Commerce in
Thailand’s property committee.
As the financial crisis reaches another phase, there is the
issue of the repayment of unprecedented stimulus packages put in place by
countries such as Britain, and the new government has embarked on a strategy to
make adjustments to both its fiscal and monetary policies to repay its colossal
debt.
Sterling’s current rate against the baht is not just a
crucial factor of the financial crisis and the protests in Bangkok, as the
exchange rate has fallen from a high of Bt73/ฃ back in the heady days of five
years ago to Bt48/ฃ today, and this has made property investment in this country
a lot more expensive.
During the crash, when nations teetered on the brink,
governments were the solution to the economic crisis, now they are the problem,
and the trend is for local property investors to step in: for people who live in
Thailand and are quietly confident that a peaceful resolution to Thailand’s
political crisis is in range, they will start to buy condos again.
Aliwassa Pathnadabutr, managing director of international
consulting firm CB Richard Ellis (Thailand) said that the price of condos in
Thailand will remain stable. A report in the Bangkok Post quoted her as
saying: “Buyers will continue to have the upper hand in residential markets.
Although developers may not lower prices, they are likely to have strong
promotional campaigns to stimulate sales.”
In her view, the revival of Thailand’s tourism sector is
needed first in order to boost the residential market. “It will take up to two
years before foreigners invest again.”
As another analyst put it, relating to the crisis in Greece:
“We are watching a fight between the ideas of two long-dead economists — the
Austrian Schumpeter vs the Englishman Keynes. To put it very simply, Schumpeter
advocated letting the incompetents, imbeciles, profligates and the unlucky
self-destruct. Out of this destruction, something new and healthier will be
born, eventually...”
Maybe, but the future economic outlook, with Greek contagion
bringing down larger economies and, as a spin-off, its tourists, coupled with
the civil unrest in Thailand, is tentative. It would help if oft-fractious Thai
politicians become far more mutually accommodating to ease economic pressures
and its effect on employment.
The Bangkok Post recently noted that: “The second
quarter will represent an aberration while the first quarter can be viewed as
the real indicator for longer term property market trends. And this is the best
way to proceed at this juncture.”
However, as a by-product of this sentiment, the Cabinet
recently approved the one-month extension of the property tax incentives to the
end of June: transfer fees and mortgage registration fees will remain 0.01 per
cent of property value, from normal rate of two and one per cent, respectively,
although DBS Vickers Securities (Thailand) noted that though the extension is
positive to the property sector, the impact will be quite limited.
The Board of Investment (BoI) is also in the process of
coming up with new measures to promote investment after Thailand’s medium and
long-term investment potential was affected by the recent political riots.
Added to this, government agencies are launching remedial
measures to help those affected by the riots, especially in the tourism and
retail sectors and Japanese investors are still interested in pouring investment
into Thailand, having proposed 99 projects with a combined value of Bt25.6
billion.
For condo development in Bangkok, new supply of around 6,940
units hit the market in the first quarter and developers have been focusing on
smaller one-bedroom units, targeting local first-time buyers who are looking for
affordable products. Even though there are scant indications that the demand for
condos in the 1.5 million baht range is yet replete, it is predicted that the
future for this sector remains somewhat bright.
While first-quarter reports assess the overall state of the
real estate market, they still lack defining statements on what market sentiment
is today after the troubles, both global and domestic. It seems it will need the
skies to clear over Europe and Thailand before predictions on the condo market
become truly visible again for some while to come. PRLog (Press Release Soho
Properties)
