Property Developers in Thailand are raising record funds in the domestic bond market to finance high-end residential projects despite the country’s sluggish economy that has impacted most other segments of the property market, The Nation reported.
According to the Thai Bond Market Association, THB54.2 billion of bonds were issued by developers in the first half of 2015. This number is a record for a six-month period and totals roughly 74 percent of the debt sold by developers for all of last year.
Thailand’s lacklustre economy has made banks cautious about lending which is why developers have focused on raising funds from the debt market. It is a cheaper alternative than bank loans even after the rate cuts from the central bank. Prime lending rates are at least 6.5 percent, which is significantly higher when compared to the 3.31 percent on five-year bonds issued this year by Land & Houses, Thailand’s largest home builder, The Nation added.
Even with the bad economy in Thailand, the property market has been buoyed by the country’s affluent population who continue to purchase high-end properties. A majority of wealthy Thais are purchasing projects near public transportation sites or future transportation hubs in Bangkok.
The value of new housing projects in the city jumped 64 percent in the first six months of 2015 to THB227 billion from last year. The Agency for Real Estate Affairs is expecting the final total for 2015 to end up at THB449 billion. The agency estimates that the market value of new premium units will significantly rise some 281 percent this year while cheaper units are expected to not see any growth in 2015.
“We have also switched to the high-end market,” said Kessara Thanyalakpark, director of Thai property firm Sena Development told The Nation. “Others probably think the same, as household debt is quite a problem for the lower segment of the market.”
