From its business district to leafy suburbs, new condominiums are sprouting almost daily across Bangkok, but developers and investors alike seem little concerned about a property bubble developing.
The country’s real estate stocks have been on the boil with the index of property stocks up 28 per cent in the last three months and many listed companies have raised profit forecasts, confident of capitalizing on what they say is insatiable local demand.
Other Asian governments, worried about asset bubbles and housing affordability, have tried to yank back their respective markets, with Thailand’s nearby neighbor, Singapore, the latest to unveil a slate of tightening measures. But Thailand is unlikely to follow suit, analysts said.
‘Interest rates are still low. There’s still huge demand, particularly with units from listed companies. Growth in the property market tends to move in tandem with GDP and the economic fundamentals are more sound now,’ said Sorapong Jakteerungkul, a property analyst at Kasikorn Securities.
He pointed out that the government’s only move has been to raise its key policy rate from a record low of 1.25 per cent by half a percentage point, a rate is still low amid rebounding consumer spending.
‘Lifestyles are changing and there’s not been many obstacles for young workers and first-time buyers with low purchasing power to get credit,’ he said.
The number of new condominium units in Bangkok more than tripled to 13,028 in the first quarter, compared with only 3,389 in the second quarter of 2009, when Thailand emerged from its first recession in 11 years, according to Bank of Thailand data.