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Bangkok Condo Market to Gain from Mass-Transit

By on Jan 13, 2016 in Property News, Residential

The Bangkok condo property market will experience stable growth of 3-7 per cent annually over the next 10 years once the government begins investing in infrastructure projects, says Thongma Vijitpongpun, president and chief executive officer of Pruksa Real Estate.

In an interview with The Nation, Thongma said the Greater Bangkok property market would benefit from the planned construction of 10 new mass-transit routes link-ing the capital with its suburbs. At the same time, such infrastructure projects as railway double-tracking, high-speed rail and motorways linking the Kingdom with Laos, Cambodia, Myanmar and Malaysia would stimulate the market in the provinces over the next decade.

He was speaking after meeting on Friday with Finance Minister Apisak Tantivorawong, who headed the first meeting of a joint public-private working team on attracting investment to Thailand and stimulating infrastructure investment.

Last year, the nationwide residential market was valued at Bt620 billion, up by 5 per cent from 2014. Of that figure, metropolitan Bangkok accounted for Bt330 billion, with the rest in the provinces.

Once the government starts working on the new transit routes, it will open up new areas for residential development, as demand shifts from Bangkok’s central business district to the suburbs thanks to greater ease of commuting to and from the city centre, Thongma said.

“We forecast that demand will grow by an average of 7 per cent a year in Bangkok and the suburbs from this year through 2025, and during the same period the demand for homes in the provinces will grow by 3-5 per cent. Our estimate is based on our experience after two mass-transit routes – the BTS Skytrain from Mor Chit to Sukhumvit 107 and Mor Chit to Bang Wa and the MRT subway from Hua Lamphong to Bang Sue – were constructed,” he said.

The demand will come from both the lower-income and upper-income markets.

Thongma said Pruksa had sent a proposal to Apisak last month on how to develop residential projects for the low-income market.

“We proposed that the finance minister consider tax incentives to get the private sector interested in joining with the public sector for such projects. We also noted the problems facing [the real-estate] business, especially the Environmental Impact Assessment process. This delays approvals and is also complicated,” he said.

According to a study by Pruksa, out of a total population of about 16 million, there is a potential market of 7 million people in Greater Bangkok currently renting or living with their families who would like to own their own homes. But only 400,000 who earn at least Bt25,000 per month, enough to qualify for a mortgage, are able to make a purchase annually.

If the government relaxed the rules so as to provide mortgages for people below this income level, the company believes that demand for homes costing no more than Bt600,000 would double.

“We are ready to build up to 20,000 such units a year, if the government agrees with the proposal. And it is not only Pruksa that is interested in this project but other property firms as well,” he said.

Source: The Nation – 11 January 2016

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