thai housing market in decline

[gaijin]

The following is from the breaking news section of the Bangkok Post:

Property market goes into decline

(Agencies) - With consumers feeling gloomy over the outlook of post-coup Thailand, the kingdom's nearly six-billion-dollar housing market has shrunk for the first time since 2000, industry experts say.

"People are delaying buying property due to a lack of confidence in the economy and politics," said Atip Bijanonda, president of the Thai Condominium Association.

Sales in the residential property market, worth 200 billion baht ($5.8 billion), dropped by 10 billion baht in the four months to April this year, marking the first decline since 2000, the association said.

The figure has rattled the industry, which saw demand nosediving during the 1997 Asian financial crisis.

Atip said he expected more bad news with Thai consumer confidence stuck at a five-year low.

"The market may have negative growth this year," he said.

To shore up housing demand, the military-installed government, which came to power after a coup in September 2006, is expected to launch measures aimed at reviving the property sector, including tax cuts.

Pimonwan Mahujchariyavong, a property analyst at Kasikorn Research Center, said consumers were putting off buying property as they awaited a further cut in the key interest rate.

"Consumers are expecting gains from falling interest rates and they are waiting for the rate to go down further," Pimonwan said.

The Bank of Thailand slashed its key interest rate by a half-point to 3.5 percent last week in a bid to spur sluggish consumer spending and the slowing economy.

It was the fourth rate cut this year but business leaders called on the central bank to lower the rate more aggressively in an effort to stimulate the economy, which is seen rising 3.8-4.8 percent this year.

If growth was just 3.8 percent in 2007, it would mark the lowest increase since 2001, when Thailand's gross domestic product (GDP) expanded 2.2 percent.

With flagging finances and political uncertainty under the military government, the number of new housing projects has fallen as some 90,000 houses and condos remain unsold in the market, said Pimonwan.

"The property market has slumped significantly since the beginning of this year because of shrinking confidence in the economy among developers as well as consumers," she said.

Longlom Bunnag, chairman of real estate management firm Jones Lang LaSalle Thailand, agreed.

"The slow growth of demand that the market is experiencing now is largely due to a lack of consumer and investor confidence rather than a decline in spending power," he said in a statement.

But Longlom said anticipated elections will likely see sales pick up later this year.

"We expect demand to recover in late 2007 or early 2008, once the political uncertainty is clear following the new election scheduled for December this year," he said.

How much is the clampdown on farangs using company structures impacting on the HH housing amrket?

[caller]

[Norseman]

[JimmyGreaves]

We'll have to see what the Judges have to say later this week to see what's is next instore on the political roundabout!

[gaijin]

The company structure point is only a minor aspect of the thrust of the article. More importantly is the slowdown in the growth rate and the lack of consumer confidence. If this continues whilst other regional economies power ahead of Thailand, I would expect that there would be a groundswell of concern. Where this would go I do not know. I suspect that one change will be a reversal of the anti-farang regulations, which would seem counter productive to economic growth. One reads stories from time to time of concerns about farangs taking Thai jobs, to the popint where a farang must not help out in his Thai wife's bar.

It would be interesting to know how much foreign investment adds to the HH economy, and by how much the HH economy is boosted by farangs living in HH from income generated abroad. I would also be interested to get some feedback on the current real estate market conditions in HH. Of course the growth in HH is largely driven by Thai demand, but the farang element does help to boost the local economy. Say there are 1,000 ex-pats in HH. If the average monthly expenditure was 60-70,000 Baht, that would add up to 70,000,000 baht per month. Perhaps I am out on my ex-pat population figures or the monthly spend figures, but the conclusion points in the same direction.

[johnnyk]

Friend of mine just received his chanote title.
Next.

[STEVE G]

Bangkok Post:
Two British investors have shifted to Vietnam two billion baht in property investment planned for Thailand due to the uncertain market caused by political tension, the Foreign Business Act (FBA) and a serious decline in consumer confidence. ''The FBA does not directly affect our [existing] business in Thailand, as our properties are actually owned in a Type II property fund which allows full foreign ownership,'' said Joel Feldman, one of the two investors.

''The only other effect that the FBA is having on our business is our expansion. Earlier, we wanted to build and expand our company but we're now putting future expansion on hold including the taking on of additional staff.''

Mr Feldman and his partner previously planned to spend two billion baht on new property development and the acquisition of an old condominium for refurbishment.

But early this year, after the FBA announcement, they instead decided to invest in a property fund established in Europe and managed by Citicorp. The 10-year fund, with 10 institutional investors, already invested about 10 billion baht in commercial properties in Vietnam.

In 2005, the pair invested in the Lizmans Property Fund with registered capital of 500 million baht. The fund is now managed by Akando Co Ltd of which Mr Feldman is the managing director.

The fund's holdings include 225 units in the Family Park Condominium in Soi Lat Phrao 48, 20 units in the PST condominium in Rama III and 120 units in a condominium in the Intamara area.

Last year, Akando renovated the Family Park Condominium and put the units on sale with guaranteed rental returns.

''We are continuing to achieve sales [of Family Park] but at a slower rate than before, with 90 units remaining after the sales launch in September last year because of the uncertainty in the market,'' he said.

Akando plans to launch sales of another two projects next year after the general election takes place and an elected government is formed.

''Thailand's property market this year will face a small decrease. This likely goes against the trend in the Asian region as a whole. Thailand seems to be the only country that is not enjoying the benefits of a strong growing property market,'' said the 40-year-old investor.

''Once an election has taken place and if the right measures are put in place by the new government to encourage internal and external investors then we may see ... substantial increases next year, as the Thai property market will have a lot of catching up to do with its neighbours.''

[gaijin]

[''if the right measures are put in place ....... to encourage internal and external investors then we may see .."]

Exactly my point. Vietnam and Cambodia are taking off. Thailand had a head start, but seems to be drawing itself inward.
[/quote]

[redzonerocker]

i'm no expert on the economies of any country. i do though have a little experience of working & living in various unstable countries throughout my lifetime.
my point would be, what if these investors do go to vietnam & cambodia? can they assure a successful outcome? the answer is no!
there is no completely assured region in the world to invest.everywhere & anywhere is liable to change at the drop of a hat in these unpredictable times.
speculation is just what it is, speculation. to speculate= to guess; as is stated in the oxford dictionary.
since i came home from years of working abroad, i have been informed by these speculators that the uk construction industry would be heading for a recession. if this happens, then the knock on effect is the whole country goes into recession. i work in this industry so it effects me.
the threat of this recession has been running since 1998 & still it has yet to evolve.
i fully understand your concerns about the future of the thai economy, but as yet, it is unwritten. so to speculate on the whims of these overpaid guessers, it isn't worth worrying about.
that is just my opinion!
_________________
when all are one & one is all, to be a rock & not to roll.

[Mack111]

The Thai Baht cant be helping either, when I bought my place it was well over 70 Baht to the GBP and now its 63 or something like, so I guess Brits at least will not want to buy now either for that reason alone, mind you the other reason just as important

[JimboPSM]

These days “speculation” is far more scientific and not the “educated guesswork” or "whim" that it used to be.

Sophisticated “speculators” (and there are a lot of them) will have a due diligence undertaken on any project, researching all aspects of the project with detailed financial forecasts including sensitivity analyses on all the risk elements (such as political, geographic, economic etc) before they part with their money.

[Mack111]

it is more scientific i guess but there is still a lot of people loose a fortune

[ozuncle]

Yes Jimbo,
and even they get it wrong sometimes.
IMO if you buy property and hold it long enough you will rarely lose.
This is of course, in a politically stable country.
If you buy in Thailand you obviously take additional risks.
Most of us here (on this forum) are not speculators so risk is not so important.
We buy for a variety of reasons but mainly i think long term. And by long, I mean forever.
Most of us will die before we want to sell but at least we will die happy and in my case my darling wife and her family will be repaid for the hard work and wonderful times she and her family have given my.
She can't read English so don't think I am crawling.

_________________
You only live once.

[Zidane]

The Thai housing market would appear to be in decline with many new properties remaining unsold.
The Thai baht has dipped to 63 from 70 to the £ in the UK.
But maybe this is not a bad time to consider buying as you could get a really nice property on the cheap and the housing decline may well be only temporary ?

Zidane

[caller]

I haven't seen any evidence of prices falling from estate agents sites, but if you are on the ground and make an offer......?
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I know nothing