There is no threat of a property bubble in Thailand according to a new report from real estate agency Plus Property.
The real estate services provider and consultant claims there is
no sign of economic interference in the industry and demand is organic –
not the result of property flipping. This is despite the fact
ready-to-move condos have seen a 21 percent jump in demand.
Lifestyle changes among the Thai people have been cited as the
reason behind the changes. Properties are becoming more and more sought
after as the domestic market looks to move towards homeownership and
settle down. Foreign buyers are also being drawn to the condo market and
have plenty of opportunities to make an extra income through holiday
rental in certain locations, such Phuket.
However, investors should beware that mortgage criteria is
becoming tighter in the country and the country has cut loan-to-value
ratios to prevent the speculation which led to the property crash,
according to local media reports. The economic slowdown and household
debt had led some banks to tighten criteria of their own accord,
including the United Overseas Bank.
The institution lowered its loan-to-value ratio to 80 percent
from 90 percent for residential real estate priced at THB10 million
baht. Kasikornbank also tightened rates to between 75 percent and 80
percent from 90 percent to 95 percent for third-home borrowing, TMB Bank
was the third to independently cut loan-to-value rates to 70 percent
from 90-95 percent for second mortgages and holiday homes.
Tightening lending criteria will promote market sustainability,
particularly in areas of high demand like downtown Bangkok, where
condominiums are dominating the market.
According to CBRE Thailand, in 1988 there were just 10,000 condominium units in Bangkok but today there are more than 350,000.
"With continuous supply coming onto the market, the condominium
market will become even more complicated and competitive," CBRE noted.
However, as the market becomes more sustainable, it is expected
low volume and high value will come tocharacterise the sector in the
future, it said.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote
this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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