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Thailand Business News –

This year’s floods have had a vast impact on the property market, with sectors affected across the board. But the impact varies from sector to sector,from residential to industrial.

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Floods Won’t Affect Thai Property Market in the Long Term
Thailand’s property sector is showing signs of an early recovery, as selective investors return to purchasing real estate stocks and actual property.

Some of the credit goes to a one-year government stimulus package that reduces the Special Business Tax from 3.3% to 0.11%, extends the reduction on transfer taxes from 2% to 0.01% and mortgage registration fees and provides a tax deduction on mortgage principal and interest.
Thailand’s property indicators show:

1.The Stock Exchange of Thailand (SET) index began rebounding in April 2009, and property stocks – while the first to fall in H2/08 – were amongst the first to recover
2. The Bank of Thailand (BoT) has lowered its policy interest rate four times since December 2008, prompting banks to reduce the minimum lending rate (MLR) from 7.25% to 6.25%
3. A continued drop in sales of durable goods due to uncertainty surrounding the economy is highlighted consumer confidence index (CCI) to a historic low of 72.8 in Q1/09 and New housing registrations in Bangkok and surrounding areas fell 43.8% in Q1/09

Recognising that sales would slow, forward-thinking companies took the opportunity to focus on their fundamentals and improve their balance sheets. This was the strategy of Hubert Viriot, CEO of the luxury developer Raimon Land, who was appointed in the midst of the crisis.

Second, Thailand’s banking system is much healthier than its Western counterparts. There are no toxic assets on local banks’ balance sheets. This benefits both the supply and demand side.

But a stable political environment in Thailand would likely see interest rates rise by half a percentage point. And oil prices will float at about US$85 to $95 a barrel. Construction costs will rise when oil prices and interest rates are in an upward trend. Overall housing supply has dropped over the past two years with a decrease in the number of construction permits. Many small-sized developers went bust after failing to access loans from local financial institutions.

Thailand Business News – Thailand Business News

The housing industry has experienced a slowdown compared with last year as a result of rising interest rates and construction costs. However, developers are anticipating more active atmosphere after the election. Share this Article

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Thai Election is cooling down Property Market
Thailand’s property sector is showing signs of an early recovery, as selective investors return to purchasing real estate stocks and actual property.

Some of the credit goes to a one-year government stimulus package that reduces the Special Business Tax from 3.3% to 0.11%, extends the reduction on transfer taxes from 2% to 0.01% and mortgage registration fees and provides a tax deduction on mortgage principal and interest.
Thailand’s property indicators show:

1.The Stock Exchange of Thailand (SET) index began rebounding in April 2009, and property stocks – while the first to fall in H2/08 – were amongst the first to recover
2. The Bank of Thailand (BoT) has lowered its policy interest rate four times since December 2008, prompting banks to reduce the minimum lending rate (MLR) from 7.25% to 6.25%
3. A continued drop in sales of durable goods due to uncertainty surrounding the economy is highlighted consumer confidence index (CCI) to a historic low of 72.8 in Q1/09 and New housing registrations in Bangkok and surrounding areas fell 43.8% in Q1/09

4 billion baht.

Developers with solid projects have access to financing while buyers have access to credit.

The severity of the global financial crisis also saw the government introduce additional sweeteners for buyers — a 300,000-baht income tax deduction for any buyers of a new home that was transferred within 2009. At the same time, mortgage interest that could be deducted from taxable earnings was increased to 100,000 baht from 50,000 and has now become a permanent tax benefit.

Thailand Business News – Thailand Business News

Despite the Bank of Thailand announcing measures of decreasing LTV’s for condominium to 90% and the LTV’s for houses to 95% to cool the property market, developers still continued to acquire sites for residential projects. There have been concerns about an influx of foreign money into Thailand. There have been significant foreign inflows into the Thai bond and stock markets but virtually no significant foreign investment into the Thai property market. Share this Article

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Thai Property Market still driven by local Investors

Recognising that sales would slow, forward-thinking companies took the opportunity to focus on their fundamentals and improve their balance sheets. This was the strategy of Hubert Viriot, CEO of the luxury developer Raimon Land, who was appointed in the midst of the crisis.

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.

The severity of the global financial crisis also saw the government introduce additional sweeteners for buyers — a 300,000-baht income tax deduction for any buyers of a new home that was transferred within 2009. At the same time, mortgage interest that could be deducted from taxable earnings was increased to 100,000 baht from 50,000 and has now become a permanent tax benefit.

Thailand Business News –

		Thailand’s second biggest property developer, Sansiri PLC, has set itself ambitious targets over the next 3 years in order to capture more of the low end  property market. Affordable condos are in demand The company’s chief operating officer, Khun Wanchak Buranasiri  recently announced new targets that will see revenue increase by 10%  this year to eventually reach THB29 billion (US$947 m) in 2012 and then THB35 billion (US$1.1bn) by 2013
Thailand Business News

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Thailand’s developer Sansiri switches to low end property market

Recognising that sales would slow, forward-thinking companies took the opportunity to focus on their fundamentals and improve their balance sheets. This was the strategy of Hubert Viriot, CEO of the luxury developer Raimon Land, who was appointed in the midst of the crisis.

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.

The tax breaks was initially introduced on March 2008, when the special business tax was reduced from 3% to 0.1%, and the transfer and mortgage fees cut from 2% and 1% respectively to 0.01%. These incentives were due to end on December 2, 2008, but have effectively been extended until the current May 30 deadline.

Thailand Business News -

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Bangkok’s property market moves towards emerging markets

Later, as investors tried to rebuild their diminished wealth, they turned to the very sector they had abandoned first, property development.

These cultural changes are evidenced in the type of housing recently launched. On the lower- to mid-end side, Supalai and LPN have launched projects in Ratchayothin and Ratchada with units ranging from 28 to 55 square meters and prices from 1.5-3 million baht, reflecting demand among single professionals and young families. On the higher end side, where prices are at or above 100,000 baht per sq m, the Sukhumvit and CBD areas remain the preferred location. The common point between all this? Easy access to BTS and MRT lines.

Only large developers on the stock market remain on the Thai market, as they can access a source of funding. Prices of single detached houses and townhouses only rose moderately over the past year, with condominium prices increasing the most to more than 100,000 baht a square metre in Bangkok from 80,000 to 90,000 baht.

Thailand Business News – Total supply of all types of residential projects was expected to reach 98,000 units this year, much lower than the 200,000 units in the lead-up to the 1997 crisis. Thailand Business News

Read more here:
Oversupply and mortgage capping to weigh on property market
Thailand’s property sector is showing signs of an early recovery, as selective investors return to purchasing real estate stocks and actual property.

Some of the credit goes to a one-year government stimulus package that reduces the Special Business Tax from 3.3% to 0.11%, extends the reduction on transfer taxes from 2% to 0.01% and mortgage registration fees and provides a tax deduction on mortgage principal and interest.
Thailand’s property indicators show:

1.The Stock Exchange of Thailand (SET) index began rebounding in April 2009, and property stocks – while the first to fall in H2/08 – were amongst the first to recover
2. The Bank of Thailand (BoT) has lowered its policy interest rate four times since December 2008, prompting banks to reduce the minimum lending rate (MLR) from 7.25% to 6.25%
3. A continued drop in sales of durable goods due to uncertainty surrounding the economy is highlighted consumer confidence index (CCI) to a historic low of 72.8 in Q1/09 and New housing registrations in Bangkok and surrounding areas fell 43.8% in Q1/09

Instead of wasting resources when consumers were clearly holding back, we decided to restructure the company, clean up the balance sheet and refinance our debt with local banks.

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.

Property market in Thailand remained in a strong position thanks to good sales in the first quarter which were not only driven by the incentives. The stock market is risky to invest in, while buying gold for investment has limitations.
The recovering economy is re-building consumer confidence while homebuyers’ purchasing power is also strong, he said. Development of the mass transit network in Bangkok was another boost for the market. Politics has had little impact on condominium sales but it has dampened investment and the industrial, commercial and tourism sectors.

Real estate operators will remain in the doldrums in the second half of the year due to the psychological fallout from recent political unrest, says Bank of Ayudhya’s research department. A research report from the bank indicated that lingering political tensions will delay decisions by real estate business owners to reinvest in or expand their operations. Consumers will also lack the confidence buy property or commit themselves to long-term debt. The property sector should recover at the end of the year as long as there are no further outbreaks of political violence, the research said. Continue Reading