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In the past two years Bangkok has seen several leasehold condominium projects launched, including the Residences at the St Regis Bangkok, the Ritz-Carlton Residences, Bangkok, and the Oriental Residence. While buyers’ preferences have traditionally been for freehold property, these top-end leasehold projects are seeing a significant increase in demand.
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Demand for Bangkok Leasehold Condominiums on the Rise
The SET index bottomed at 432 in December 2008 after tumbling from a high of 833 earlier that year. The index then levelled off in Q1/09, before working its way back to 560 in May. Triggered by positive pre-sale signs from developers, a reduction in construction costs and the government’s stimulus package, property stocks were among the first to bounce back. The SET’s revival reached a mark just 32% below its peak, in line with other world stock markets including the Dow Jones (-33%), Singapore Straits Times (-27%), the Hang Seng (-25%) and the FTSE (-27%).
The Bank of Thailand Monetary Policy Committee stopped cutting its key rate in May 2009 after seeing signals of a recovering economy. Many expect banks to adjust their rates down once rising confidence supports housing purchases, and promotion campaign launches to grasp home buyers.
As a result of declining consumer confidence during four consecutive quarters there has been a dramatic drop in sales of big ticket items such as vehicles (-33%). Bangkok housing registrations for single houses and townhouse units have also been hit hard, while investments and new mass transit lines have boosted market share for condominiums in the residential property sector, although the market demand as a whole has been lower. Transactions will most likely remain slow until confidence returns to both buyers and bankers, who finance property developers and their customers.
Prinsiri took a similar approach.
Like Raimon Land, Prinsiri did not lower its prices : it was not all bad news, however, as the recovery soon took hold in the second half and by the fourth quarter GDP posted 5.8% growth and many developers reached their annual sales targets.
Developers are confident in the property market’s long-term potential, which will improve in line with Thailand’s economic growth, despite political turmoil on the streets of Bangkok.
Property firms in Thailand saw their performances improve in the first quarter compared to the same period last year, largely thanks to tax breaks for home-buyer. The property market has improved since the third quarter last year with sales picking up. Based on a wide range of forecasts, the Thai economy is expected to grow by 4% this year, but political uncertainty will reduce purchasing power and local and foreign investment in Thailand.
