Thailand Real Estate – While rental yields may seem moderate in the current economic climate, continued low interest rates are likely to ensure market stability as property remains the favoured investment.
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Thailand property compared to other investment options
Bangkok Property overview
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.
Being a developing country, the cost of property in Thailand is much lower than in the more developed European markets. But, on the other hand, prices for Thai property, in general, are rising at a much faster rate.
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
Any fall in domestic savings will impact Thai Real Estate Market corporate funding and investment. Mortgage loans will be more difficult to obtain : The slowing economy will force Thailand’s banks to be more restrictive in their lending practices. Mortgage loans will be more difficult to acquire with rejection rates rising. Lower supply : Responding to slowing market conditions, developers will lower their risks by building fewer homes and reducing supply. New housing supply will also be reduced because developers will have more difficulty obtaining equity, bond and credit market financing because of the global financial crisis. 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.
Is There a Silver lining amid COVID-19?
Thinking of the future impact of this pandemic on office buildings, it may have already dawned on many of us that a majority of potential long-term trends and health measures will become permanent work-life features in the times to come.
The time is ripe to embrace Industry 4.0
Traditional brick-and-mortar retail has suffered tremendously, as countries have been implementing effective stay-at-home and social distancing policies to mitigate virus spread, while those worst hit have enacted strict draconian lockdowns
We have entered a time where, seemingly, interconnectedness is the new enemy, staying in is the new going out, and antisocial is the new social. COVID-19 has brought us on the cusp of growing accustomed to new norms and sounded a wake-up call in terms of how we live.
Covid-19 puts flexible space markets under strain
In the wake of operator defaults, landlords will be forced to re-evaluate the role of flexible space in their portfolios.
The global Covid-19 outbreak has had serious negative effects on commercial real estate, including flexible space. Of late, many operators have experienced the flexible nature of the business working against them, as many occupiers have opted to surrender desks and implement work-from-home plans.
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