The 3rd quarter was slow as residential developers remained cautious about investment during this time, according to research from the Real Estate Information Center (REIC). Low consumer confidence and slower economic activities in Thailand were cited as the reason for the cautious approach.
Housing developer’s expectations index fell to 61 points in the 3rd quarter, a drop of 6 points from the previous quarter. According to the REIC survey, this shows a weaker confidence in revenue, pre-sales, investment, employment, and new project launches from residential developers.
The drop in confidence could be related to the expectation that economic activities in the 4th quarter will fall while development costs could increase, reports the Bangkok Post.
Developers are also less confident in regards to pre-sales for the upcoming quarter as this REIC index also decreased. However, the survey was not all bad news and developers were bullish on revenue in the 3rd quarter when compared to the previous one.
“This reflects that developers’ adjustments were fruitful. They shifted to investing in the upper-end segment. Developers also remained confident in residential demand as sentiment index on demand slightly rose,” says the report.
There was a dip in confidence for new project launches with the REIC sentiment index falling from 60.4 to 59.3. Despite this, some developers have a positive opinion on investing in new projects as long as they were in a segment where demand and purchasing power were strong.
Ultimately, the overall economy in Thailand will set the tone for the real estate market. At the moment, it has not recovered fully but experts point to positive signs during the past several months that show growth in exports and tourism arrivals.
“The overall economy was still sluggish. People did not feel the economy had improved despite what the government claimed. Many businesses struggled, like the retail sector, which faced decreasing income among tenants,” says Surachet Kongcheep, Associate Director of Colliers International Thailand, to the Bangkok Post.
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