Property Business Likely To Slow Down This Year: Bot

[george]

Property business likely to slow down this year: BoT

BANGKOK: -- The property business is likely to slow down this year in tandem with the economic sluggishness, but a downward interest trend will help stimulate the business to a certain extent, according to the Bank of Thailand.

Speaking at a seminar on “Property Sector: Main Economic Indication for 2007,” the central bank governor Tarisa Watanagase said the property business would grow at a slower pace on par with the country’s economy, which is expected to expand only 4-5 per cent this year because private investment and consumption are likely to increase slowly at 4.5-5.5 and 3.5-4.5 per cent.

The housing indicator reflected a continued slowdown since 2005 since there are many factors that undermined developers and consumers’ confidence such as higher building material prices and rising oil prices.

However, she said, interest rates are expected to decline because inflations rates had fallen continuously. Such a downward interest trend would help boost the property business.

Mrs. Tarisa said the central bank had given an importance to the property sector.

At present, she conceded, outstanding loans extended to property developers had increased partly because small- and medium-size developers experienced a liquidity crunch thanks to a decline in a demand for property.

She said the central bank wished to see the property sector grow steadily to prevent a repetition of bubble burst in the business.

Kitti Pattanapongpibul, President of the Housing Mortgage Association, said he was concerned an increase in the number of completely-built housing units, particularly expensive single houses, would lead to an oversupply in the market.

He said the property market slowdown had now gained momentum as the liquidity in the business had reduced in parallel with a decline in total sales.

So, he wanted to warn developers to run business more carefully because the situation might develop into a mini bubble burst.

However, should lending rates be cut by more than 1 per cent this year, he said, it would help boost the property market to a certain extent.

--TNA 2007-02-02

[John K]

Worldwide property boom prices locals out of market

By IANS

Friday February 16, 10:47 AM

Bangkok/Berlin/Washington, Feb 16 (DPA) Previously best known in the tourism industry for its sleazy nightlife, the Thai beach resort of Pattaya is enjoying Southeast Asia's first second-homes property boom, and the buyers are primarily wealthy Europeans and Americans.

Last year, the resort sold more than $230 million of beachside condominiums, mostly to foreign buyers.

Although modest by international standards, the construction boom - there are about 300 condominium and residential projects underway in the Pattaya neighbourhood - has already raised concerns about exacerbated water shortages and rising crime against foreigners.

And the boom is pricing locals out of the market.

'Four or five years ago, you could buy any condominium unit for about $30,000 to $35,000,' said Clayton Wade, managing director of the Premier Homes Real Estate Co and a longtime Pattaya resident. 'They have all at least tripled.'

The prices are being ramped up by the dearth of reasonably priced vacation homes in the US and Europe, a growing global market for beachside property and a lot of speculation, including some money-laundering activity.

'We've got plenty of monkey business in this town,' Wade conceded.

Similar housing booms are taking place at Thailand's other beach resorts - Hua Hin, Samui and Phuket - and to a lesser degree in other Southeast Asian destinations, notably in Indonesia's Bali.

And the take-off in second-homes sales is not limited to Southeast Asia.

Europeans are flocking to Croatia and Bulgaria to snap up Mediterranean villas that are cheaper than what's on offer in Spain. Americans are going south to Mexico, Costa Rica, Panama, Nicaragua and Honduras in search of affordable getaways.

The global migration from the developed world has been unleashed by a number of factors. For starters, there are a lot more wealthy people in the wealthy countries, and much of this new wealth has been generated off property.

According to estimates by The Economist magazine, the value of residential property in developed countries increased by more than $30 trillion from 2001 to 2005, an increase equivalent to 100 percent of those countries' gross domestic products.

The Economist's dire prediction in 2005 that this property boom is the world's biggest bubble that is about to kaboom has yet to be actualised. Instead, the bubble has spread to more remote shores.

'Globally, what's happened now is there are a lot of people not just buying a second home but finding that investing in real estate makes money,' said David Simister, chairperson of the real-estate company CBRE Richard Ellis in Bangkok.

Simister is selling luxury properties on Thailand's Phuket island, some of which are fetching up to $5 million. The foreigners who are buying these properties are often reselling them at a huge profit.

'People are very savvy investors,' Simister said. 'They know property is an appreciating asset and absolute beachfront or ocean view is a finite commodity.'

In other words, the property boom has gone global. It helps that the world is a much more connected place and that even far-flung locations are often easily accessible.

At your $5 million villa in Phuket, you are an hour's drive from an international airport that can take you to any country in the world. And rather than queuing at a travel agent's you can book you ticket via the internet from your home computer while watching CNN on cable TV and munching on some Kentucky Fried Chicken, home-delivered.

This is all good news for the rich. Construction on luxury condominiums and villas is also good business for local economies, providing jobs and new markets for local suppliers of goods and furniture.

But there are downsides.

Take a look at Spain, which boasts the biggest second-homes industry in the world, worth more than four billion euros ($5.2 billion) in sales annually.

Foreign buyers have driven up housing prices at double-digit rates, making homes largely unaffordable for most Spaniards. About 30 percent of Spain's young adults live with their parents.

Sales of prime property to individual investors can also mean lost opportunities for the local tourism industry as the example of Galle, one of the most popular tourist destinations in Sri Lanka, shows.

'We are having a huge problem as foreigners have purchased homes in Galle city, posing a serious setback to the local tourist industry,' Mayor Kelum Senaratne said.

'At least 40 houses have been purchased outright by foreigners in the Dutch Fort in Galle, and they are making renovations according to their own will despite the fort being declared a World Heritage site by UNESCO,' the mayor said.

Social scientists have expressed concerns that this new migration of wealthy foreign homeowners into the developing world could end up causing more social problems, such as competition for water resources and rising crime, than the economic opportunities are worth.

'Governments think about [property] development in terms of investment, job creation, incoming dollars but not in terms of the social impact on the local population,' warned Allen Cordero, professor at the Latin American Faculty of Social Sciences in Costa Rica.

I am sure this is not great news for the Culture Minister. It would seem that her actions seem to work against cash inflow. I wonder how long before that ministry seat becomes history.

Now lets see.... what is the magic formula to make money. I think it has something to do with testosterone.

[Casanundra]

I find it incredible that no one has bothered to cite publicly that the slow down could have something to do with the visa changes, the nominee shares debacle, the new FBA changes for foreign investments, the coup, the bombs in Bangkok, the continued political unrest, the poor airport and cracks in the runway, the exchange rate of the baht, the general feeling of unease in the foreign community here and the increases in violence in places like Pattaya and Phuket.

But of course it's only the higher costs for material and oil prices love that are to blame for the slow down and how dare us foreigners push up the prices in the first place for land that we cannot legally buy anyway.

[Dupont]

Think a slow down is optimistic to say the least.

By the end the year they could easily be in free fall. There is nothing in place to regain confidence and everything to put off investors.

They are going to have real problems going after land in foreign hands, and at the same time, that is going to scare of potential retirees to Thailand for decades to come.

I personally have 4 friends who have shyed off buying this past six months. Two have gone to Sihanookville looking for that area taking off.

[ThaiGoon]

Think a slow down is optimistic to say the least.

By the end the year they could easily be in free fall. There is nothing in place to regain confidence and everything to put off investors.

They are going to have real problems going after land in foreign hands, and at the same time, that is going to scare of potential retirees to Thailand for decades to come.

I personally have 4 friends who have shyed off buying this past six months. Two have gone to Sihanookville looking for that area taking off.

I hope you will follow your two friends to Sihanookville soon too.

"By the end the year they could easily be in free fall." and "scare of potential retirees to Thailand for decades to come. " What a couple of silly and OTT statements to make. But I suppose that's typical of a Bill O'Reily/Fox News fan.

[Khun ?]

Few and far between on americans even though they have their share in Thailand.

The place is filling fast with young retiree's from europe that have killed other markets more ways than one. Seems to be anyone with a bit of savings and cannot cope with life in dredges of western europe is showing up in Thailand. Vietnam and other areas should start to see the lowest of lower

income moving in soon. When ever you have as many foreigners selling to foreigners in the local housing market, time to move on.

I can tell you many of the foreigners you meet now days are trying to sell you property.

Central America many places have surpassed rural areas of the U.S housing prices.

Condoes selling at well above $200K for the basics small one and 2 bdrms, and they are not selling in local currency. I cannot wait until many of these people end up in their 50's and 60's living on scratch in crime ridden places. Retirements lasting 30+ years is almost the norm for many now days with a bit of savings or income of some sort. I am just glad I put in a few more years when I reached the

mark that I was to retire at. Quite easy to move to nicer places when you have a decent planned retirement but it is going to be hel_l for many that find themselves short of cash living in overseas foreign ghettoes like Pattaya is turning in to. Even the country side has plenty of crime to keep most under constant lock and key at night.

[cdnvic]

Could be trouble for those that are leveraged, but for those who have been saving up for that retirement property, it could just be opportunity knocking.

[SeanBangkok]

Think about how much money Nana Plaza brings into Thailand, billions of baht a year from middle aged men flocking here. Pattaya is like a sewer, i cant believe people are willing to pay that much.

[John K]

The inside information is it’s just the high end that is booming like “North Shore” on Soi 5. From what I have heard it has only been open for just about 2 months and is nearly full. People with that kind of money don’t have to worry about having enough money in the bank for a retirement visa. One problem, the only unit in the building that A non Thai can buy is the penthouse. I would imagine that is the case because only a non Thai could afford it. Must be that quality tourist thing.

I have a friend who just moved in there (not the penthouse) and that is what information he passed onto me.

[Dupont]

Think a slow down is optimistic to say the least.

By the end the year they could easily be in free fall. There is nothing in place to regain confidence and everything to put off investors.

They are going to have real problems going after land in foreign hands, and at the same time, that is going to scare of potential retirees to Thailand for decades to come.

I personally have 4 friends who have shyed off buying this past six months. Two have gone to Sihanookville looking for that area taking off.

I hope you will follow your two friends to Sihanookville soon too.

"By the end the year they could easily be in free fall." and "scare of potential retirees to Thailand for decades to come. " What a couple of silly and OTT statements to make. But I suppose that's typical of a Bill O'Reily/Fox News fan.

Been already Mr Troll.

Not many Thais there when I went, apart from all those high and middle class thais in the gambling casinos and whore houses on the border.

Many future retirees who are now in their 40's and 50's are the ones that you are putting off now. For sure they will remember where there hard earned pensions are safe. Most falangs having a memory span of more than half an hour will certainly remember these times.

Enjoy you ranting posts and rages against foreigners all you want. Its us that will enjoy an even cheaper standard of living why you balls the economy up again!

[richard10365]

If this is a sign of things to come, Laos, Cambodia, and Myanmar could be the place to invest in the future. Cambodia and Myanmar still have many beach side areas that could be potential property market booms in the future.

[bingobongo]

it will be interesting to see the YOY comparisons given they did not include the capital controls and bombings that did not occur until late December

and if you take into account inflation (real vs. nominal) returns are actually negative

Edited February 19, 2007 by bingobongo

[bingobongo]

who will buy all those overbuilt properties as the economy is sinking?

Wednesday February 21, 2007

As economy fizzles, job prospects dim

A drop in both economic growth and the employment intensity of that growth has dimmed job prospects in Thailand, says a report by the United Nations Development Programme and the International Labour Organisation (ILO). Indonesia shares a similar plight, said the report which studied the situation in Cambodia, China, India, Malaysia, the Philippines and Sri Lanka.

Except for Malaysia, ''all the Asian countries studied experienced inadequate employment growth, and the problem has got worse in recent years'', said the ILO statement.

''This has been major factor in weakening the impact of economic growth on the earnings of the poor and in making growth less poverty-alleviating than it might have been.''

The causes of inadequate employment growth vary, the report says.

''In China and India, the two largest developing countries, the sharp fall in the employment intensity of growth has been the problem,'' said the ILO.

''In Indonesia and Thailand, the cause was both a reduction in employment intensity and a reduction in the rate of growth. In Cambodia, the Philippines and Sri Lanka the poor employment performance was, by and large, due to inadequate growth or growth bypassing the large sectors where poor workers are concentrated,'' the ILO said.

The study, titled ''Asian Experience on Growth, Employment and Poverty'', focuses on the employment intensity of economic growth as a means of poverty reduction and provides insights into why job growth is declining in some fast-growing Asian economies.

Edited February 20, 2007 by bingobongo

[LaoPo]

who will buy all those overbuilt properties as the economy is sinking?

Wednesday February 21, 2007

As economy fizzles, job prospects dim

A drop in both economic growth and the employment intensity of that growth has dimmed job prospects in Thailand, says a report by the United Nations Development Programme and the International Labour Organisation (ILO). Indonesia shares a similar plight, said the report which studied the situation in Cambodia, China, India, Malaysia, the Philippines and Sri Lanka.

Except for Malaysia, ''all the Asian countries studied experienced inadequate employment growth, and the problem has got worse in recent years'', said the ILO statement.

''This has been major factor in weakening the impact of economic growth on the earnings of the poor and in making growth less poverty-alleviating than it might have been.''

The causes of inadequate employment growth vary, the report says.

''In China and India, the two largest developing countries, the sharp fall in the employment intensity of growth has been the problem,'' said the ILO.

''In Indonesia and Thailand, the cause was both a reduction in employment intensity and a reduction in the rate of growth. In Cambodia, the Philippines and Sri Lanka the poor employment performance was, by and large, due to inadequate growth or growth bypassing the large sectors where poor workers are concentrated,'' the ILO said.

The study, titled ''Asian Experience on Growth, Employment and Poverty'', focuses on the employment intensity of economic growth as a means of poverty reduction and provides insights into why job growth is declining in some fast-growing Asian economies.

Which economy is sinking ?

Please quote your source as I checked the "Asian Experience on Growth, Employment and Poverty" 'study' but the one I found is from 1989...

LaoPo

[bingobongo]

who will buy all those overbuilt properties as the economy is sinking?

Wednesday February 21, 2007

As economy fizzles, job prospects dim

A drop in both economic growth and the employment intensity of that growth has dimmed job prospects in Thailand, says a report by the United Nations Development Programme and the International Labour Organisation (ILO). Indonesia shares a similar plight, said the report which studied the situation in Cambodia, China, India, Malaysia, the Philippines and Sri Lanka.

Except for Malaysia, ''all the Asian countries studied experienced inadequate employment growth, and the problem has got worse in recent years'', said the ILO statement.

''This has been major factor in weakening the impact of economic growth on the earnings of the poor and in making growth less poverty-alleviating than it might have been.''

The causes of inadequate employment growth vary, the report says.

''In China and India, the two largest developing countries, the sharp fall in the employment intensity of growth has been the problem,'' said the ILO.

''In Indonesia and Thailand, the cause was both a reduction in employment intensity and a reduction in the rate of growth. In Cambodia, the Philippines and Sri Lanka the poor employment performance was, by and large, due to inadequate growth or growth bypassing the large sectors where poor workers are concentrated,'' the ILO said.

The study, titled ''Asian Experience on Growth, Employment and Poverty'', focuses on the employment intensity of economic growth as a means of poverty reduction and provides insights into why job growth is declining in some fast-growing Asian economies.

Which economy is sinking ?

Please quote your source as I checked the "Asian Experience on Growth, Employment and Poverty" 'study' but the one I found is from 1989...

LaoPo

this was pulled from the Feb 21, 2007 Bangkok Post online edition, General News section

http://www.bangkokpost.com/News/21Feb2007_news20.php

Edited February 20, 2007 by bingobongo