Bangkok Property Journal – Theres luxury, and then theres super-luxury. The difference is in the details, as Bangkoks high-end condo market splits into two tiers.
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Bangkok condo market
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.
Real estate developers in 2009 are more cautious and many have professionalized their operations. Compared to 1997, of them are able to respond much more quickly and many of them have developed and implemented market research technologies and monitor the market closely. As a result, the financial condition of most major housing developers is much more robust than in the past. The development of the local bond markets and increasing domestic savings has the made the industry much less dependent on foreign funds, a significant difference from 1997.
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.
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