July marks the 20th anniversary of the financial crisis that saw Thailand’s economy coming crashing down. The impact of this extended to Malaysia, Indonesia and the Philippines while Hong Kong and South Korea would also be affected. Many experts claim it started when the Thai baht was devalued and ended up bringing the country’s housing market down.
There has been some talk of a bubble in the housing market emerging similar to what appeared in 1997. While analysts agree on the fact that there is condo unit oversupply in Bangkok, they do not agree that a bubble is happening again, local media reports.
Supachai Panitchpakdi, former Director-General of the World Trade Organization, and Bank of Thailand governor, were among those warning of a bubble that could crash the property sector and cause a 1997-style financial crisis. However, Prasert Taedullayasatit, President of the Thai Condominium Association, believes this isn’t likely since developers are smarter now than they were in 1997 and have measures in place to prevent it from happening again.
One key difference between 1997 and today is customer screening. During the financial crisis, developers focused on selling units and didn’t screen customers, meaning booked units were never transferred to speculators, says Prasert. Developers now pre-screen customers to determine if there is real demand for their projects.
Several of Thailand’s biggest developers have set up market research units in order to understand market conditions before making important investment decisions. In addition to this, the Real Estate Information Center was created in 2004 to monitor the number of residential units being launched each year and keep track of the market.
“There were no information centres related to the property sector in the pre-1997 era to provide warnings about oversupply to help them adjust their business plans and strategies in time,” says Prasert to the Bangkok Post.
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