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Property market likely to ‘correct’ robust growth, expert warns

Thailand’s fast-growing property market runs a risk of facing a slowdown after its robust growth last year, according to a real-estate expert.

“Look at the Thai [property] market. Whenever you see completions go a hundred thousand a year, you start to see probably a slowdown now. Things may change. I’m cautious. It might be time for correction,” said Brett Gordon, founder of Panna Capital, who is based in Hong Kong. “Would I buy a condo in Phaholyothin [area] today Probably not.”

With Thailand’s economy growing at a fast pace, and high consumer confidence, the transfer of property rights in Bangkok and its vicinity increased to 178,128 units in 2010 from 161,240 a year earlier, according to the Bank of Thailand’s Economic Conditions Report in January. The increase is in line with the number of residential units completed and registered in those areas, which increased to 105,152 units in 2010 from 94,977 previously.

However, small listed retail property companies in Thailand remain attractive to Panna Capital, which focuses on the listed real-estate sector in the Asia-Pacific region.

“What interests me in Thailand at the moment is the retail sector. There are small listed retails. The dominance of the large listed retails in Thailand [has reached] its maximum,” said Gordon, who spent the past 17 years in the Asian real-estate sector.

In response to a question about the impact of the central bank’s decision to raise the loan-to-value (LTV) ratio, which took effect at the beginning of the year, Gordon called it a sensible move by the monetary authority.

For condominium units costing less than Bt10 million, the LTV is capped at 90 per cent, which means a loan cannot be more than 90 per cent of the unit cost. For low-rise properties, the cap will be 95 per cent. It will be applied to purchase contracts dated January 1, 2012, onwards and will not be retroactive.

“From the fundamental point of view, they are going to make sure there is equitable distribution to the property market,” Gordon said.

The BOT is now less concerned about a bubble in the condominium market, because of a reduction in oversupply and a slowdown in demand. Gordon agreed: “I would say the listed real-estate market discounts most of those concerns even in the worst case.”

Source: The Nation


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