Demand For Condos For Rent In Bangkok Weakened By Protests And Currencies But Still Remains Buoyant

Demand For Condos For Rent In Bangkok Weakened By Protests And Currencies But Still Remains Buoyant

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Demand for condos for rent in Bangkok is likely to take its toll in the aftermath of the anti-government rallies that exploded into scenes of violence last month. But, according to analysts, the Thai property market will remain buoyant.

Patima Jeerapaet, managing director of property consultant Colliers International Thailand, has said that although property activities may drop in the second quarter, traditionally a quiet period, it is likely that local demand will pick up in the third, but that foreign demand remains unpredictable.

A report in the Bangkok Post quoted Mr 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 Mr Patima, also chairman of the Joint Foreign Chambers of Commerce in Thailands 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.

Sterlings 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/ back in the heady days of five years ago to Bt48/ 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 Thailands 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 Thailands 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 Thailands 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 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.

However, it will need the skies to clear over Europe and Thailand before predictions on the condo for rent market become truly visible again for some while to come.

About the Author:
Soho Properties are a real estate agency based in Bangkok with braches in Pattaya & Chiang Mai.
http://www.soho-properties.com/bangkok_property_forum/?p=426
http://www.soho-properties.com/condos_rent3.php
http://www.soho-properties.com



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