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Thailand Property Investment Demand Slightly Dampened

By on Sep 12, 2013 in Research

Thailand Investment MarketView, Q2 2013

Thailand Investment MarketView Q2 2013There was still demand for income producing properties. However, there were a limited number of assets being offered and sellers generally had a high and unrealistic expectation on the price and transaction terms. The sentiment in the property market was slightly dampened by the weak performance in the stock market in the second quarter of this year.

There was a general slowdown in the launches of condominium projects in downtown and mid-town Bangkok compared to the Q1 2013. Condominium developers will continue to expand in provincial cities but the size of these markets is limited by small populations meaning that there is a limit on what can be built and sold.

We still expect that there will be an increase in the number of developers planning to hold IPO’s for Public Listed Property Funds before the end of the  year after which no more funds can be established.

To date no one has used the new REIT structure for property assets even though these allow increased gearing. This is partly because the tax issues which are yet to be settled.

Developers continued to look for sites for condominium development in both downtown and mid-town locations.

Condominium development remained the most profitable use for most downtown sites. Consequentially, we saw sites bought for condominium development dominating the land transaction market in downtown Bangkok.

Ananda Development PCL announced a joint venture initiative with Mitsui Fudosan, a real estate developer from Japan. The companies set up SEA Investment Five Pte. Ltd. With of THB 1.8 billion of capital. Ananda Development PCL and Mitsui Fudosan each hold a 49% interest in the company.

The new Bangkok Plan has been published. The new plan has had a limited impact on land prices in Bangkok because there were few changes from the old plan.

The limited number of transactions and limited public data on the transactions that have taken place means that there is little comparable evidence on yields but we feel there has been little change in the yields that purchasers expect.

This is an extract from Thailand Investment MarketView Q2 2013, click to download the full report.

Toby has been living in Bangkok for a number of years and has a strong research background. With his years in Thailand Toby brings a wide range of property knowledge to his research writing

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