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Developers plan for year ahead with caution; buyers warned to be wary.

Thailand’s property market is expected to shrink by 5 to 10 per cent next year as the country falls under the full impact of the global economy recession and local political uncertainty continues without resolution, property experts say.

According to a survey by The Nation earlier this week, most property developers and realestate agencies accept that the property market will fall significantly in 2009 as concern about future earnings intensifies and homebuyers set aside plans to buy new homes.

Some buyers of residential properties, without a clear picture of future earnings, are expected to trim down their budgets and opt for lowerpriced homes. On top of this, mortgages will be more difficult to obtain as commercial banks impose restrictions to protect against bad loans.

Preuksa Real Estate president and chief executive Thongma Vijitphongpun said his company would revise its planned residential projects in 2009 by focusing on the middle of the market, with prices ranging from Bt1.5 million to Bt3 million per unit, to meet customer demand.

“We believed that total propertymarket volume next year will fall between 5 and 10 per cent from the estimated total volume of 80,000 units this year. We have seen the signs in this final quarter of 2008, when the number of visitors to our projects has dropped between 5 and 10 per cent and presales have shown only slight growth,” he said.

Normally, the last quarter of the year is the best time for selling properties from residential developments.

LPN Development’s managing director Opas Sripayak said his company would adjust its business plan next year by reducing the size of its residential projects according to expected demand in various locations. This approach is expected to provide a speedier cash flow than launching large projects.

“Our board has analysed the property market and expects it to drop next year, so we have to be concerned about our plans. We will continue to expand our investments and launch new projects, but we have to be careful,” he said.

Real Estate Information Centre directorgeneral Samma Kitsin said the property market had already fallen significantly since September and October, when most commercial banks began to restrict their provision of mortgages. The banks are now rejecting about 40 per cent of mortgage applications, when the previous rejection rate was about 25 per cent, he said.

Samma said the global economic recession was expected to significantly reduce the value of Thailand’s exports next year, and this would reduce purchasing power. This will have an indirect impact on the property market, forcing it to shrink by 5 to 10 per cent compared to this year.

With the market trend, Samma warned that both property developers and buyers had to be careful in 2009. Developers had to be wary when launching new residential projects and homebuyers had to be careful in buying. They should buy only from property firms with the best record for delivery to customers on time, he said.