Developers expect pickup on infrastructure
Thailand’s property sector is expected to improve this year as household debt eases and construction of mass transit lines picks up.
Developers need to be cautious with their investment and new launches, particularly at locations with overwhelming supply, says the Bank of Thailand.
Don Nakornthab, senior director of the central bank’s macroeconomic and monetary policy department, said the property sector will improve in line with the economic growth forecast of 3.2% this year, the same level as last year.
“The country’s economic growth will be driven mainly by the public sector, both through the annual investment budget and spending on infrastructure projects,” Mr Don said yesterday at a seminar on the property market.
“Positive factors also include an increase in tourist arrivals, recovering consumption and low interest rates.”
He said the sector may grow at a pace slower than economic growth, but without drastically impacting the country’s economic growth.
Household debt is expected to drop to less than 80% of GDP as the economy improves, Mr Don said.
Some challenges seen in the property market last year will continue into this year, he noted, including non-performing loans in the housing sector which rose to 4.6% in the fourth quarter last year from 4.1% in the same period of 2015.
“Developers should be more cautious,” he said. “Not all locations along the mass transit lines are good for condominium development as there is an oversupply in some locations.”
Atip Bijanonda, president of the Housing Business Association, said many developers have shifted to the upper-end market after they were unable to transfer units in the lower-end segment due to high household debt and banks rejecting mortgage applications.
“Developers should be cautious in launching new projects in the high-end segment as buyers in this segment are limited in number but there is a lot of supply available in the market, and there will be even more in this year,” he said.
Mr Atip said the government’s spending should have an impact on the property market in the second half. The government should move forward with infrastructure on time so the private sector follows.
He expects the property market will grow by 5% this year, with condos ranking the largest market share. Townhouses will have a higher growth than condos as new mass transit lines will cause a rise in land prices, which will drive condo prices.
“In the same location, townhouses located further from a station preferred as unit prices are more affordable than condos,” he added.
He suggested developers should also be more cautious in launching new condos in major destinations like Pattaya and Phuket where there is too much supply.
Mr Atip said the provincial market will be still sluggish but only provinces in the eastern region will have good growth as the locations will be driven by the new special economic zone and tourism.
The provincial market in the South will improve due to a pickup in rubber prices. Those in the North and Northeast will stay flat or decline as a rise in agricultural prices is not enough to drive purchasing power, he said.
Monthon Sudprasert, director-general of the Department of Public Works and Town & Country Planning, said the department is revising a city plan to comply with new infrastructure.
“As there will be new towns surrounding the new high-speed train routes and stations, there should be specific city plans for these areas and no more private development projects located zero metres from the station,” he said. “The government should benefit from its investments.”
Chaiwat Thongkamkoon, director-general of the Office of Transport and Traffic Policy and Planning, said a link between Bang Sue and Tao Poon station will open in August and five new mass transit lines will open for bidding this year.