FOREIGN INVESTORS KEEP AWAY
|FOREIGN INVESTORS KEEP AWAY|
|THE NATION Issued date 26 January 2009|
| Property developers in popular resort destinations including Phuket, Krabi, Hua Hin, Pattaya and Hok Samui have suspended construction projects worth tends of billions of baht following a significant drop in demand among foreign investors in the wake of the global economic slump.
According to a survey by Colliers International Thailand, the purchasing power of foreign investors, especially those from the United States, Europe, Hong Kong and Singapore, has dropped between 20 per cent and 50 per cent, depending on the location.
"As the sub-prime [mortgage] crisis in the United States has turned into a global crisis, demand for luxury residential projects costing between Bt25 million and Bt50 million has dropped significantly, especially in resort destinations," said Risinee Sarikaputra, Colliers International Thailand's head of research.
Given the market trend, a number of property developers who had planned on launching projects in the last quarter of 2008 have decided to wait.
However, Risinee said the company's clients from South Asia and the Middle East have continued to develop residential and hospitality businesses.
These include property funds from Pakistan and Bangladesh, as well as India's Taj Exotic Group, which plans to invest nearly Bt50 billion in residential and hospitality projects in Phuket this year and in 2010.
According to Phanom Kanjanathiemthao, managing director of property agency Knight Frank Charter (Thailand), demand for residential projects among foreign investors has dropped by up to 50 per cent in the past month.
The effects of the global economic crisis were beginning to be felt in the Thai property market, he said, particularly in the luxury condominium segment, which depends heavily on foreign buers.
"Given the market trend, we have recommended that customers delay the launches of nearly Bt10 billion worth of residential projects until the second half of this year," he said.
Wanwipa Horbut, deputy managing director of Baan Surin Hill, a developer of high-end residential projects in Phuket, agreed that demand for luxury residences in Phuket has declined since the global downturn behan to hit customers' incomes at the end of last year.
However, the company believes demand for second homes among foreign investors will revive in the second half of this year, she said.
Harrison vice president Kitisak Jampathippong said Malaysian clients suspended a plan to invest in hotel business in Bangkok worth Bt5 billion in August after the People's Alliance for Democracy seized Government House and protested at Phuket International Airport.
Phuket, Hua Hin, Koh Samui and Pattay have been most affected by local and foreign buyers' syspension of plans to buy residential projects in resort destinations. Kitisak had a different take on what was behing the deteriorating market situation in resort areas, however.
"The US financial crisis did not affect purchasing power [available for] residential projects at resort destinations, because the main customer target for this market is from Europe [including] Scandinavia. But most homebuyers from Europe... are concerned about Thailand's political turmoil, and decided to delay their investment plans," he said.
Kitisak said the current trend could have the effect of stabilizing residential prices in resort destinations, as it follows an earlier period in which most property developers were adjusting their prices to reflect strong demand.
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