Plus says local demand healthy

Despite the expiry of tax incentives and continuing political uncertainties, Thailand’s property market still has bright prospects in the second half, thanks to the improving domestic economy, according to the brokerage Plus Property.

The industry in the latter half would continue to be driven by strong local demand while foreign buyer sentiment would remain poor as western economies are sluggish, said Anukul Ratpitaksanti, deputy managing director for asset management.

“Since the beginning of the year, there was much worry over the impact of the political turmoil, but the overall market in the first half turned out to be better than expected,” he said.

The tax breaks, which expired yesterday after being extended twice, helped spur demand and offset the poor sentiment caused by politics.

Plus Property recorded transactions worth 1.5 billion baht in the first half, compared with 2 billion for all of last year. Sixty percent of last year’s transactions came from rental projects and 40% from sales.

The company forecasts its sales will grow by 15% to 2.3 billion baht this year.

Mr Anukul said the industry, however, still hoped the government would continue its support in terms of tax cuts to keep stimulating the market, which could also benefit the economy and related industries.

While foreign buying has been weak for three years, the rental market is still doing well, particularly in tourist destinations, Mr Anukul said.

The condominium rental market in Bangkok is also expected to remain stable given the large amount of new supply in the past few years. Existing condos have reduced rental rates to stay competitive with new projects.

Average monthly rental rates of condominiums near mass-transit stations such as Phra Khanong or Taksin are estimated at 10,000 to 30,000 baht a month or 300-500 baht per square metre. Those in the CBD areas such as Sukhumvit sois 24-26 cost about 600-800 baht per sq. m.

Rental yields of condominiums in Bangkok have eased to 5-6% per year when compared with 8-9%, but Mr Anukul said they remain attractive when compared with bank interest.

He added that there was only a small gap between yields of new projects and existing ones as new projects are facing rising costs of land.

Real demand makes up half of the condominium market in Bangkok while the other half is demand for investment.

The Lat Phrao to Ratchadaphisek area came first in the market this year in terms of new condo supply, with about 70 projects introduced in the last five years.

Plus Property currently has 15,000 listings worth 150 billion baht in hand. Of the total, 40% belongs to its parent company Sansiri Plc, and others include 500 land plots.

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