Thailand property sales could dip 10 per cent in 2009

Political chaos and low interest among foreigners takes a toll

The Thai property market will see sales decline by more than 10 per cent this year as the political uncertainty takes its toll on the already battered economy, property experts said.

Thai Condominium Association president Atip Bichanond said the dire outlook for the country's 2009 GDP, which the government now forecasts will contract by between 5 and 6 per cent - compared to a projected decline of 3 per cent before the latest flare-up in the political conflict - would have a negative impact on the property market.

"We believe the property market in Bangkok and its suburbs will decline by more than 10 per cent this year compared with last year. Home-buyers are concerned about future earnings, with the country's GDP expected to decline by more than 6 per cent," he said.

Atip added that the condominium market will be worse-hit than the low-rise residence market, which includes detached houses, double houses and townhouses, because demand among foreign buyers - the main target market for condominium projects - has dropped significantly due to both the global recession and the local political turmoil.

"We suggest property developers revise their business plans and exercise caution when selecting locations for their residential projects, and that they carefully manage their cash. This will help them survive the crisis," he said.

The association had earlier estimated the property market would stay flat or grow by 5 per cent this year in the wake of the government's decision to extend property-tax incentives.

Meanwhile, international property agency Knight Frank Charter (Thailand) has postponed its home show, Taste of Living, originally scheduled for April 22 to May 3 on Siam Paragon's M Floor, until October. The company's managing director, Phanom Kanjanathiemthao, said the show had been delayed because of concerns that the political turmoil would dampen demand among home-buyers.

"Based on my experience, home-buyers will likely delay decisions on whether to buy until two or three months after the easing of the political crisis. Siam Paragon was booked solid in two to three months time, so we had to postpone the expo till October," he said.

Real Estate Information Centre (REIC) director-general Samma Kitsin acknowledged that political strife this Songkran had hurt the property market, which he said would decline by as much as 10 per cent this year, compared to the centre's earlier prediction that the market would be flat or even grow by nearly 5 per cent.

The property market faced the twin burdens of the US sub-prime mortgage crisis and the domestic political problems, he said.

Since the emergence of the sub-prime crisis, property firms developing residential projects for foreign buyers had seen demand for residences in Thailand among foreigners drop more than 50 per cent, he said.

The domestic property market took a big hit from the Songkran political chaos. The residential market in Bangkok and its suburbs is expected to decline by more than 10 per cent from 82,000 units last year to between 72,000 and 73,000 units this year, he said.

Thai Real Estate Association president Somchao Tanterdtham said property developers would need to slash their investment budgets. Those planning to launch new residential projects will have to think carefully about the locations, and research their target clientele carefully, he said.

Demand for residences priced below Bt1.5 million per unit will take the biggest hit from the economic slump, while demand for projects priced between Bt2 million and Bt5 million may hold steady, depending on location and other details of the particular project, he said.

Source: The Nation 20 April 2009