Real Estate Overview
Thailand real estate information
One of the main casualties of the economic crisis in the late 1990s was the housing market. Many development projects were abandoned midway through construction in Bangkok, resulting in them being named ghost-scrapers. Prior to the crash, the housing market had been booming, but as a result many buyers found themselves stuck with negative equity.
Now the housing market has improved considerably. Indeed such is the strength of the housing market that it has been named as one of the drivers of recent economic growth.
Real estate mortgage loans growing at a steady pace
The property market accounted for 4% of the GDP between 2000 and 2003 and the Thaksin administration is used it as a growth engine for related industries such as cement, steel and household goods.
The number of new mortgage loans is growing at a steady pace, which has been helped by lower interest rates. In 1998, the average mortgage interest rate was 15.3% but fell to 5.7% in Q1 2004.
Inevitably with the late 1990s fresh in the minds of many, fears of a bubble remain high. In a bid to counter this, only 70% of the total value can be mortgaged while the majority of Thais see their purchases as a home, not an investment, keeping demand in check.
As prices have been increasing at a steady rate for several years now, Thailand is not as affordable as it once was. Despite the few obstacles remaining for foreigners to buy property it still remains popular.
Many of these purchases are for personal use but an ever increasing number of foreigners are purchasing into resorts, allowing them to bypass the strict ownership rules while receiving a guaranteed return of 5-8%, management and use of the resort themselves.
Real estate development in Thailand
The year 2005 had been a readjustment year for real estate development in Thailand. The Bangkok residential market has recorded a reduction of residential development activity following from the robust growth experienced during the past few years.
However, the diminishing demand did not hurt the property development sector as much as anticipated due to the supply factors immediately adjusting itself at the same time.
The Bangkok downtown condominium market has significantly slowed down in terms of both supply and demand. Only new high-end developments and low priced condominium projects have been launched over the recent years.
Low priced condominium market
The low priced condominium market that are targeted near to the MRT and BTS rapid mass transit lines have proven to be more popular for developers. This trend has been greatly influenced by the recent few successfully launched developments.
The second home resort-type development has now become a choice development for the property developer. Hua Hin, Pattaya and Samui which were not affected by the Tsunami became a new magnet for new developments. Both Thai and foreigner investors are the popularly targeted potential buyers for these up and coming hot resort areas.