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2 Oct 2012

Real Estate and Construction

Property Market in Greater Bangkok: Flooding Key to Buying Decisions (Business Brief No.3356 Full Ed.)

Since early 2012, the property market in Greater Bangkok has been facing a number of challenges. In particular, the massive flooding during late 2011 continues to affect the buying and selling of residential property in flood-hit areas, because prospective buyers are delaying their decisions pending developments in the situation this year. Despite government measures to stimulate the property market, home buying has been greatly inhibited by an unfavorable economic climate as a result of the Eurocrisis that is taking a huge toll on our exports and economy, which is just recovering from the flooding. Nevertheless, it is expected that the property market will begin to rebound in 4Q12, though flooding remains a potential concern.
As a result, we at KResearch have decided to revise downward the number of home ownership transfers in Bangkok this year to 145,000-148,000, receding 1.0-3.5 percent YoY, which would still be better than the 18.3 percent contraction in 2011. It is expected that the number of condominium ownership transfers will grow favorably this year, particularly toward the yearend when there will be more condominium projects entering the market. Condominium projects have benefited significantly from the flooding, because many units have been bought as second homes, whereas sales of low-rise residences have declined.

Because flooding will continue to be a major factor affecting homebuying decisions, it is expected that property developers will adjust their business strategies to ease any impact from it, while the government and relevant public agencies will need to place greater importance on systematic flood prevention measures, especially in flood-prone areas.

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