Tuesday, 13 May 2014

Thai Property Market Shows Growth for 2014

Business analysts such as CBRE and The Real Estate Information Center (REIC) claim the Thai property market is showing growth at the moment.  The REIC predict the property sector will grow 5% to 10% in 2014 (http://www.thailand-property.com/news/view/thai_property_market_to_see_up_to_10_growth_in_2014). Although analysts point to increased demand and a general upswing in the USA and UK economies, it is worth noting that the healthy property market portrayed is somewhat misleading.

The news of the 2 trillion Baht government investment plan for infrastructure in Thailand is central to the confidence displayed in the Thai property market. It looks like a lot of this money will go into the expansion of the BTR or Skytrain. As a consequence there is a high demand for property near the new proposed BTR stops. Buying to let in Bangkok has been a solid performer bringing in returns of 10%. For those with excess cash and an eye for an investment Bangkok remains an attractive proposition. Thai condominium laws mean that foreigners can buy a freehold. There are, of course, others legal structures to gain ownership of a property as a foreigner.

As with the UK housing market, figures for the industry are skewed by the capital effect. Because property prices rise in the capital the increases (in London over £1,000 a month) bring up the averages for the country as a whole. However, if you are selling a property in Udon Thani or Hull then you might not find you can make a good return on your initial investment.

The problem of reporting is systemic. The people who tend to comment on the building and property markets are those who live by these commercial sectors. It is in their interests to exaggerate and pick facts to create more confidence and more increases. Real estate traders get bigger commissions as they are on percentage payments. Moreover, high confidence means more building works and more employment. The property sector is important in Bangkok as it is in London for many reasons.

In Thailand the underlying problems in the Thai property market remain, although perhaps there is some light at the end of the tunnel.

These problems are:

1)The restrictive ownership laws and the obtuse and restrictive visa laws for non-Thais
2) The massive financial crash of 2008 and its continuing repercussions of spiralling out of control national debts
3)The on-going political violence and uncertainty in Thailand which has a strong impact on foreign investment and tourism

Just these 3 issues should make sellers and buyers of Thai property realise that value is key and that it is not the place to make a quick buck, unless that is unless you want to buy to let a flat near a Skytrain stop.  

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