Despite an opportunity for healthy growth from upcoming Asean economic integration, the property market in major northeastern provinces should be more cautious, as property prices have risen too high too quickly in recent years, warns the Real Estate Information Center.
A housing project in Nakhon Ratchasima, one of the top three northeastern provinces in terms of development activity. PRASIT TANGPRASERT
Director-general Samma Kitsin said economic, trade and property development has been rapid, boosting economic growth in the Northeast.
But at the same time, this has come with a rapid rise in land costs, with huge investment and speculation in land in many provinces, particularly in business zones in Muang districts.
"Soaring land prices may become an obstacle to housing development, as locals will soon be unable to afford high-priced housing units," warned Mr Samma.
That in turn could lead to a slowdown in the housing market such as happened along the Eastern Seaboard 20 years ago.
Other obstacles are the ongoing labour shortage and rising costs for both construction and development.
Just like in Greater Bangkok, developers in the Northeast face a labour shortage, as workers in that region shifted to the agricultural sector after farm-product prices started rising.
Too much property development in these province may overwhelm local infrastructure, so town planning and utilities must be improved, said Mr Samma.
He said foreign direct investment in the region is present mainly from China, Taiwan and Japan in both heavy and light industry.
These investors are betting on the development of regional logistics and transport routes.
However, Thais may soon find themselves crossing the border to Vientiane to shop, as Chinese and Vietnamese investors are developing four large-scale mixed-used projects in the Laotian capital.
Khon Kaen is the province with the highest number of condominium units and project launches, and the risk of an oversupply is great, said Mr Samma.
He said there is also a great deal of speculation on the part of Bangkok-based buyers who follow Bangkok-based developers.
Mr Samma named Khao Yai as another location with a large number of housing launches as developers accelerate activities to beat the new Nakhon Ratchasima town plan.
He said among 20 northeastern provinces, only three have a large number of condominium units and developments _ Khon Kaen, Nakhon Ratchasima and Udon Thani. Seven have only a few condo projects and 10 none at all.