Foreign property demand could fall 50%

Patima Jeerapaet

Patima Jeerapaet

Foreign demand for Thai property will collapse in the aftermath of the Songkran protests, property experts say.

They say the government needs to implement measures to spur foreign demand, such as increasing maximum lease terms, having 100% foreign ownership zones for condominiums, providing financial support for foreign buyers, and issuing longer visas.

The government should place more focus on boosting the property sector as it can help revive the country’s failing economy, which has been damaged further by political turmoil, said Patima Jeerapaet, managing director of Colliers International (Thailand).

Foreign ownership in condominiums should be increased beyond the current legal maximum of 49% of saleable space, in locations attractive to foreign demand in parts of Bangkok and major tourist destinations, such as Pattaya, Hua Hin, Koh Samui and Phuket.

The government should consider extending leaseholds beyond the current 30-year maximum to attract more foreign buyers and investors, he said.

But any such extension should only be allowed for a limited period, and measures need to be taken to control the use of nominees, said Assoc Prof Manop Bhongsadadt, a Chulalongkorn University property expert.

Mr Patima said the government should also allow financial institutions to lend to foreigners, and extend visa lengths to boost real estate purchases.

“From the first quarter to mid-April, the property market in Samui was quiet for the first time in five years. So was Phuket where investors held off. Now they may reduce the importance of Thai property market,” he said.

Conservative and panicked investors, which include Europeans and the Japanese, will freeze their property purchases in Thailand, he said. But Scandinavians retain a positive outlook in general, as they see political strife as a short-term problem.

Cash-rich investors from Singapore and Hong Kong remain active, particularly in beachfront land plots, he said.

“Before the recent turbulence during Songkran, we predicted the market would pick up by the end of the second quarter. We now think that won’t happen before the end of the year,” Mr Patima said.

Associate Prof Manop said there were a lot of cash-saving foreigners from Scandinavia, Germany and Russia looking investment opportunities, but they do not know where to buy.

“Incentives can help revive the economy. But now the government is busy solving political problems which will definitely take a long time. Economic problems become the second priority.”

There will be no property sales to foreigners in the second quarter because of the recent unrest, and the situation could extend into the fourth quarter. The market this year will drop at least 50% in 2009, as a result, said the professor.

Mr Patima said there were 30 small and medium-sized hotels in Bangkok for sale.

About the author

Kanana Katharangsiporn Kanana Katharangsiporn
Kanana Katharangsiporn is a senior journalist with The Bangkok Post, Thailand's first English language newspaper and specialises in property and real estate areas.
Other posts by Kanana Katharangsiporn ( 32 )

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