Thailand's property market will likely see flat growth over the next 18 months in line with the slowing economy and consumer spending, says property developers and economic experts.
The Thai economy in the second half of this year may expand by only 3.5% compared with 11.1% in the same period last year, which is considered an anomaly, Somphob Manarungsan, rector of the Panyapiwat Institute of Management, told a CP Group seminar yesterday.
"Last year's second-half growth will be hard to match, as it was 'on steroids', supercharged by populist policies," he said. "We should therefore aim at maintaining economic stability rather than accelerate growth given the spate of uncertainties, be it external and internal."
He said external uncertainties include the US winding down its bond-buying scheme this year and an economic paradox in which developed countries such as the US and Japan face deflation while developing economies such as India and Indonesia feel inflationary pressure. A possible US-led military strike on Syria may also push up fuel prices, adding to the costs of doing businesses, said Mr Somphob.
On top of that, Thailand is suffering a double blow of political and economic uncertainty at home.
Sunthorn Arunanondchai, vice-chairman of the CP Group and chief executive of CP Land Co, said Thailand's GDP is estimated to grow by 4.1% this year provided there are no more negative factors. However, fuel prices may shoot up on the military strike on Syria.
"The property sector is unlikely to weigh on the economy or cause a bubble, as it is very difficult for developers to ask for project loans these days," he said.
Prasert Taedullayasatit, managing director of the SET-listed developer Pruksa Real Estate Plc (PS), also said at a press conference yesterday that consumers are increasingly concerned about a slowdown after second-quarter growth of only 2.8%.
"The property market may see flat growth, and condominiums will increasingly dominate the housing sector, making up 60% of total market value from 55% last year. Developer must adjust their portfolios to keep up with this trend," he said.
PS recorded 14 billion baht in first-half condo sales, double its target, from six new projects. It also booked 3 billion baht in condo revenue during the period.
As of Aug 31, it had a condo sales backlog of 24 billion baht, of which 5 billion will be realised this year.
Thailand's housing market is projected to be worth 335 billion baht, of which 193 billion baht or 57.6% will be condos.
PS claims to command the largest market share in Greater Bangkok's condominium market at 9% in the first half, up from 4% last year.
"We won't build condos upcountry this year, as the market is fragmented, small and unsustainable," said Mr Prasert. "Demand in the provinces is also limited."
PS will launch The Reserve, a new condo project worth 1.8 billion baht on Sept 22. Located on a 3.5-rai plot on Soi Kasemsant 3 near National Stadium skytrain station, it will comprise 273 units sized from 27-87 square metres and priced at 160,000 baht per sq m.