The property development market is very sensitive to the overall economy. The volatility is even higher than in the general economy. The reason for that is obvious: Buying a house or condominium is a large investment and people are careful about investments in times of a weak economy. High inflation, low consumer confidence and political instability have also a negative impact on the real estate demand.
In the past years the property development market was a steady growing market. Especially the rapid growth of new registered condominiums leads to a steady growing number of new registered residences in the Bangkok Metropolitan Area (BMA). According to the Real Estate Information Center the number of new registered residences in BMA grew from 33,074 in 2000 to 78,115 in 2006. During the first half of 2007 the housing market slowed because of a lack of confidence of the customer and the unstable political and economic situation. Although the activities in the real estate market started to revive in the second half of 2007, the year ended with only 74,221 new registered residences in BMA. In 2008 the market expanded from 2007 to 78,473 new registered residences because of a governmental stimulus package to reduce property transfer and mortgage registration fees. But in the fourth quarter the market weakened again because of the global economic crisis and the political instability in Thailand. The main reason for the growth was the significant increase in the number of condominiums. While the numbers of new registered self-built houses and townhouses decreased, the number of new registered condominiums almost doubled from 16,229 in 2007 to 29,572 in 2008.
The current situation is challenging for the property development companies. The Economist predicts the economy will contract by 4.3% in 2009 as a whole. Especially the money market is tightening. As a result TRIS Rating, the Bangkok based credit rating agency, has described the country’s property... [continues]
Cite This Essay
(2009, 09). Economic Analysis Thailand Property Development. StudyMode.com. Retrieved 09, 2009, from http://www.studymode.com/essays/Economic-Analysis-Thailand-Property-Development-232940.html
"Economic Analysis Thailand Property Development" StudyMode.com. 09 2009. 09 2009 <http://www.studymode.com/essays/Economic-Analysis-Thailand-Property-Development-232940.html>.
"Economic Analysis Thailand Property Development." StudyMode.com. 09, 2009. Accessed 09, 2009. http://www.studymode.com/essays/Economic-Analysis-Thailand-Property-Development-232940.html.