Concrete expressions of confidence

[Jockey]

With all the doom & gloom posts recently, its uplifting to read some positive news about the property market in Thailand. This is from the BANGKOK POST today...

Investor confidence in Thailand's property market is once again on the rise as the sector is experiencing a new and invigorating start to the year.

The ushering in of an elected government in January has been the single most important factor, but the action of the administration to instil confidence among both overseas and local investors has been commendable and has immediately affected property sales.

The lifting of capital controls, for example, while not directly affecting the property market, has had the effect of creating a positive environment for investment and a perception that Thailand is once again welcoming capital inflows from international firms and institutions.

In addition, the government is about to release an economic stimulus package, which will have a clear impact on property investment and establish a framework that will inspire spending. This is good news for the industry and the country as a whole.

The stimulus package has cut the special business tax for property developers from 3.3% to 0.01% for one year and ownership transfer fees, which are split between the developer and buyer along with registration fees, have been cut from 2.0% to 0.01%.

While the initial tax reductions may seem minimal, business costs are reduced for suppliers, while affordability for investors rises due to the reduction in entry-level costs of transfer and registration.

More could still be done, such as increasing the maximum foreign ownership of condominium projects from 49% to upwards of 70% and opening up local lending to international investors.

In its Thai Property Sector report, the global wealth-management company UBS recently increased its 2008 forecast earnings for the Thai property market to 24%, as a result of theses policy initiatives.

The international business community was also recently reassured that the controversial Foreign Business Act would be next on the agenda in a process that would assess all existing concerns and re-create an environment that would welcome overseas investment.

The upbeat start to the year has been reflected clearly in strong purchasing patterns in the luxury condominium sector, where grade A units have been experiencing brisk business.

Sales at The River, an upscale condominium developed by my company, Raimon Land, surged past six billion baht in March, taking total sales volume for the project halfway to its target of 12 billion baht.

Buyer confidence is thriving throughout the Kingdom, and savvy investors would be wise to take a long hard look at what is on offer.

The Eastern Seaboard is a good example of the newfound exuberance among international buyers looking to active lifestyle destinations for properties to enjoy short-term capital gains or as solid rental return vehicles. Demand from this market has been high, driven by the development of the area into a five-star tourism location and the booming local economy.

Our Northpoint development is testament to this level of interest, with the 376-unit luxury condominium recently topping three billion baht in sales since its launch in November 2006.

Purchases have been noticeably quick since the beginning of 2008, with buyers signing up for 59 units worth almost 600 million baht at an average price of 120,592 baht per square metre. These early 2008 figures are most encouraging when you consider that we sold a total of 110 units in 2007.

This is a clear indication of investor confidence rising in Pattaya, with capital inflows coming from Thai investors as well as a wide spread of other nations, such as Russia, the UK, Australia, Sweden, Germany, Estonia and China. A more recent trend is an influx of Thai expat buyers based abroad who recognise the relative value of Bangkok compared to their current place of residence.

The lifting of capital controls and the offering of stimulus measures that directly benefits the property industry show a combination of both clear intent and positive action on behalf of the new government.

With such positive steps being made in the first quarter of 2008, local and international investors will continue to focus their attention on Thailand's property market and help the industry as a whole to grow.

Nigel Cornick is Chief Executive Officer of Raimon Land Public Co Ltd, a luxury international property developer with projects in Bangkok, Phuket and Pattaya. For more information visit www.raimonland.com

[buksida]

These articles always read more like PR than news to me, its the same when TAT says its tourist figures are up on last year and we know for a fact they're not - it all depends how they count them.

That said as much as I dislike the current government they are better than the junta and although most of this is concerning the Thai property sector and not foreign spending we can always hope they'll lighten up a bit on foreigners this year to boost interest and investment.

[redzonerocker]

These articles always read more like PR than news to me, its the same when TAT says its tourist figures are up on last year and we know for a fact they're not - it all depends how they count them.

there does seem to be conflicting statistics & opinions.
i agree with you buksida, it is more pr than news.
as much as the stats can be juggled, the concerns over the worldwide credit crunch are very much clear.
i think the global economy is in for a very testing time over the coming months & possibly years