The Bank of Thailand fears that bubbles could form in certain segments of the economy including property as investors look for ways to make money, Asia News Network reported. The government is monitoring the flow of bank deposits to higher-return financial instruments as well as some physical assets for signs of bubbles.
It is unlikely that Thailand would face massive economic bubbles like those seen 1997, according to BOT Governor Veerathai Santiprabhob. However, he did note that bubbles are a possibility in some segments including high-risk funds and the real-estate sector.
Small bubbles have already been recorded in these segments but it will take some time to see if they pose any trouble to the economy. “They contain risks and could have a long-term impact on the economy as a whole,” he told Asia News Network.
The property sector has recorded some speculation but Veerathai explained that the economy as a whole was in a stronger position now than it was in 1997 with foreign short-term debts low and public debt only at 44 percent of the GDP.
Property developers have recognized the warning and are taking measures to prevent speculation which would see any potential bubble expand.
Property Perfect chief executive officer Chainid Adhyanasakul said there was some speculation in Bangkok’s condominium market but this accounts for less than ten percent of total purchases. Speculators tend to focus on units priced over THB5 million which limits their scope, Asia News Network reported.
Developers who plan to build condominiums along extended mass-transit routes, regardless of real demand were given the strongest warning from the government, Bank of Ayudhya executive vice president Nathapol Luepromchai proclaimed. It is believed that a potential a supply glut could form in some areas of the city as existing projects are seeing slow sales. One reason for the sluggish sales is the dour Thai economy which has forced potential buyers to delay condo purchases and transfers.
