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5 Sep 2008

Real Estate and Construction

Construction Materials, Home Décor Products: Strategies Modified Amid Numerous Downsides (Current Issue No.2096)

The retail construction material and home décor product market is experiencing heightened competition. Outlets and marketing channels for these products scattered around Bangkok and in other provinces have lately been given a facelift. Marketing campaigns have been actively staged, especially by large retailers through myriad media. Amid changing consumer behaviors and technological advancements, new and user-friendly products have been developed to complement the DIY (Do-it-Yourself) trend.
KASIKORN RESEARCH CENTER (KResearch) projects that the retail market for construction materials, home décor products and maintenance[1] may total some THB292 billion, rising 5.8 percent, over-year, and up from the growth of 4.1 percent in 2007. (This significant increase is attributed chiefly to soaring prices of several types of construction materials and home décor products such as steel and wood-based products, sanitaryware, etc., to reflect rising costs of production.) Other positive factors include recent government economic stimuli, especially the anti-inflation measures that may restore consumer confidence somewhat. The government's tax incentives given to homebuyers plus reductions in real estate-related transaction fees will also help boost their spending power.
Over the remainder of this year, the construction material and home décor product industry may remain at risk, however. Despite easing inflation, most product prices remain high, which means that affordability will be far from improved. Meanwhile, consumer spending may be vulnerable to further oil price volatility. Significantly, a protracted political crisis here still undermines consumer confidence, as potential homebuyers allay their plans for home buying, as well as purchases of home décor products and maintenance services. Against this backdrop, the government's economic stimuli may fall short of full effect. It could be said that the construction material and home décor product business may encounter hard times on through the end of this year, especially without supporting factors in the foreseeable future.

[1]Retail market for construction materials, home décor products and maintenance refers to the consumer market that excludes business customers and furnishing products.

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