Thailand Investment - The number of new condominiums launched in the first quarter of this year has dropped by 36 percent compared with the same period last year - the result of the financial crisis and home-grown political instability - according to property brokerage Century 21 Thailand.
Some observers are concerned that the 2008 global financial crisis may affect the Thai real estate market. Many see similarities between the current US crisis and the 1997 Thai crisis, particularly in the role played by an over-built real estate sector. To properly analyze the 2008 global financial crisis’s impact on the Thai real estate market, we should first look at the current Thai real estate environment. The Thai real estate industry has grown significantly since the 1997 financial crisis. Although speculation is prevalent in some sectors, we have not experienced a 1997 bubble-like boom. Generally, a real estate bubble occurs when property prices rise quickly in a short period, primarily from speculation - resulting in a supply-and-demand imbalance. When property prices are rising faster than the cost of money and banks continue increasing loan-to-value ratios, funding becomes easier - propelling additional speculation. Thailand is member of the ASEAN (Association of Southeast Asian Nations) trade bloc and has free trade agreements with India and China, two fast-developing economic powerhouses. Consequently, many multinational companies are using the country as a regional base for its operations or a place to station employees who travel around Asia. Foreign investment in Thailand is constantly expanding, supporting the strong economic growth of the country.
Compared to 1997 Real estate companies are able to respond much more quickly to changes
Factors that indicate the 2008 Thai real estate market is not experiencing a bubble- like boom include: 1. Property prices have not changed dramatically in most areas. 2. Interest rates are continuously rising In the overall housing market, speculation is not significant even though there is some speculation in condominium markets and tourist area properties. 3.Low consumer confidence because of unstable political and economic environments. 4. Global Financial Crisis discourages overall property speculation
Condos in downtown Bangkok take a hit
The real demand for residential real estate stems from local residents and foreigners living or working in Thailand. The latter group will definitely be affected by the weak global economy but what about local Thai residents? The Thai domestic economy will also be adversely affected by the crisis, especially the export sector. The investment sector and domestic consumption in Thailand Real Estate Market will also be affected by political instability - resulting in lower sentiment and confidence. Potential home- buyers will have less money for down payments and may delay purchasing decisions. Lower construction costs : The slowing global economy will result in lower construction materials costs as global demand for these materials decreases. Investors and speculators become sellers : Although current investment and speculative demand is still low, it is prevalent in some condominium-markets and tourist- property categories.Speculators expect to generate profits from price appreciation. If prices do not appreciate as expected on Thai Real Estate Market, they become sellers.