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Thailand Property – Sector in survival mode

The business gloom triggered by negative political factors that have clouded the country since late last year has resulted in home-builders holding back their investment in marketing and advertising.  The decreasing demand in home-building business has shrunk sales volume by up to 30-40 per cent – a painful figure for the sector.  The modest forecast is that the closing figure for home sales in the first quarter will decrease by between 20 and 30 per cent compared with the same period last year.  This is despite positive signs and hope following the anti-government People’s Democratic Reform Committee’s decision to merge its rally sites into one place and return the traffic lanes in the city centres.

In the remaining three quarters of the year, business operators will have to focus on customers with stable purchasing power, in order to offset the losses incurred from shrinking demand in the customer segment for homes priced from Bt2 million to Bt5 million.  This group includes those who are not seriously affected by the political turmoil, such as the segment buying houses priced between Bt5 million and Bt10 million, and even higher, as well as customers in the provinces.

As for customers in the provinces, those living in major cities close to Bangkok and in major towns in the Northeast, demand for house-building continues to grow.  This group has high purchasing power and, therefore, their houses are priced accordingly.  Also, in the past few years, quality home-building businesses have been expanding more into the provinces. This is quite a contrast with the past, when provincial markets were dominated by small subcontractors and could only accommodate homes priced below Bt1 million.  The more recent entry of home-building companies into the provincial market has, therefore, made the business more known among the public, which has resulted in its growth.

In conclusion, the current crisis should be presented as an opportunity for business operators to adjust themselves in accordance with a fast-changing environment. If they can do this, then everyone will survive.

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