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Standard Chartered Regional Head hints on Real Estate in Thailand

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Mr. Fergal G Harris, is Regional Head, Commercial Real Estate, South East Asia Wholesale Banking, Standard Chartered

How would you rate the Thailand luxury property sector’s performance in 2008 and early 2009 and what were the major issues affecting this performance ?

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In H1/08 there was still a great sense of economic optimism in Thai luxury condominium and villa markets and sales were still quite brisk across most asset types and locations. The rapid credit events of H2/08 dried up demand. A combination of the deterioration in buyer fortunes, transference to cash and a wait and see approach stopped sales in their tracks.

What effect do you believe the global economic recession has had on the Thai luxury property market and how has Thailand fared in relation to competing markets in the region?

I believe that most buyers see luxury property as a store of wealth and potential source for capital appreciation. It is rational to expect buyers to wait and see whether prices decline and wait for bargains. I think Thailand has fared no worse than anywhere else in the region. I believe the difference regionally is that Bangkok, Phuket, and Pattaya, (to name but three locations) are established destinations for the luxury condominium and villa markets for both Thai and foreign buyers and therefore are likely to have a positive edge in recovery.

What are your predictions for the luxury property sector in 2009 and beyond and your reasons behind this prediction?

The pace and timing of a recovery in this sector depends heavily on the sentiment of both Thai and foreign investors. For higher priced units or the larger sized units I expect the market to remain quiet for sellers for 2009. For smaller units, 2010 will see some uptake in sales as buyers collectively agree that we have seen the bottom of prices for quality offerings in this segment. I believe 2011 will see a further resurgence in demand in line with global economic recovery: however I am not predicting a rapid return in prices as there will still be an overhang of inventory.

If you could ask for two elements of the Thai property industry to be improved to boost demand, what would they be and how would you implement them?

I think amendments to foreign quota restrictions would certainly assist retirees and long-term investors source product. Coupled with amendments to allow mortgages for foreigners, this would undoubtedly bring more opportunities for both developers and certain non-speculative buyers for Thailand.

Mr. Fergal G Harris, Regional Head, Commercial Real Estate, South East Asia Wholesale Banking, Standard Chartered.

This interview is an excerpt of Raimon Land CONDOMINIUM FOCUS THAILAND. A downloadable PDF file of this issue can be found at www.raimonland.com

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