Monday, November 10, 2008

Thailand's condominium market feels effects of global economic slowdown

BANGKOK: Thailand's once-booming condominium market is feeling the effects of the global economic slowdown. 

A leading real estate consultancy said that property development is expected to drop some 18 per cent in Bangkok this year, due to the global financial crisis. 

High demand has traditionally driven this sector, especially the condo market, as Thais rush to snap up apartments located along train lines to save on high gas prices and avoid Bangkok's notorious traffic. 

Said Samma Kitsin, Director of Real Estate Information Centre: "People are getting married later than before and they tend not to have kids as early as before and people are maybe living together a few years before they get married. So this lifestyle means they don't need large areas." 

Industry leaders said finding buyers is not the problem. They said that in this economic climate, finding the capital to underwrite new building projects is the real challenge. 

Property developers like Raimon Land are naturally concerned about what lies ahead. But they said their prime locations in Bangkok and beyond will help them. 

Said Nigel Cornick, CEO of Raimon Land: "We are thinking we will probably be in for a tough period along with other Asian countries. To some extent, we're seeing it with the banking sector and credit controls being stricter." 

Political instability is another concern. The Thai stock market has lost half of its value since anti-government protests began over five months ago. Violent clashes between protesters and police in early October left two dead and hundreds injured. 

But developers said that as far as they can tell, the unrest has not deterred buyers. Instead, industry watchers said the worldwide credit crunch is the main factor dragging down the sector. 

Profits from new home sales are expected to total US$5 billion, down six per cent from last year. 

In Bangkok, about 15,000 fewer homes will be built despite the likely unchanged demand. 

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