Property market recovery in 2011

CB Richard Ellis (Thailand)'s managing director Aliwassa Pathnadabutr

Thailand's property market can¬not be expected to recover from the present slump until 2011, according to Aliwassa Pathnadabutr, managing director of international property agency CB Richard Ellis (Thailand).

She said the slump began in the final quarter of this year with demand in Thailand's property market plum¬meting under the shadow of the glob¬al economic crisis.

"When we saw demand in the property market dropping, we sug¬gested to our customers that they wait and see [what happens]. As a result our customers suspended investments of between Bt4 billion and Bt5 billion in the last quarter of this year," Aliwassa said last week.

The company's research shows that transactions have fallen in all property segments in the current quarter, some of them significantly, others slightly. This is a sign that the property market may fall by 10 to 20 per cent next year, the steepest tum¬ble since the financial crisis in 1997, she said.

"We believe that this recovery cycle will be faster than that after the 1997 financial crisis because global leaders such as the US, UK, Europe, Japan and China have launched measures to solve the problem. Meanwhile, Thailand's property developers and finance firms are healthier, financially, than they were in 1997," she said.

She said the downtown condominium market was the first segment to be hit by both the global financial crisis and domestic political instability.

"Demand for downtown condominiums, especially luxury condo¬miniums, has fallen significantly, from both domestic and foreign buyers, in the last quarter of 2008," she said.

Domestic demand dropped because both homebuyers and investors are concerned about their future earnings, as well as worrying that projects might not be completed.

At present, Bangkok has between 6,000 and 7,000 unsold downtown condominium units, and these will take the next two years to sell, Aliwassa said. In normal circumstances, they would sell within one year.

CB Richard Ellis (Thailand)'s business plan for next year is to focus on consultancy and research that will build a database that customers can use in making decisions on invest¬ment or purchasing residential or commercial buildings.