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BANGKOK (AFP) - Thailand's property market is expected to rebound in 2007
amid expectations of falling interest rates, after a year of uncertainties that
plagued consumers' confidence, analysts said.
Since the bloodless coup in September, which capped months of political turmoil, analysts said confidence among buyers has improved as the broader economy appears to be picking up steam.
Despite concerns over tough new foreign currency rules, an expected fall in interest rates and more stable oil prices could also benefit the overall economy and the property sector next year.
"Demand will pick up in 2007 from this year as interest rates are expected to be cut in the second quarter, while fuel prices are unlikely to rise further," said Patti Tomaitrichitr, a property analyst at KGI Securities.
"Consumer confidence has gradually recovered as political uncertainties diminished," Patti told AFP.
This year's market will be flat from last year with 68,000-70,000 units sold, she added.
Economists forecast that interest rates -- now at an eight-year high of 5.0 percent -- will drop by a quarter or a half point in the second quarter as declining oil prices ease inflationary pressure.
"The rate cut would boost consumers' purchasing power and stimulate their spending," said Athip Bijanonda, president of the Thai Condominium Association.
The property market could expand by 6.0 percent if rates were cut by 1.0 percent, he predicted, adding that interest rates are the only key factor affecting the property market next year.
Despite the political turmoil in 2006, real estate agency Jones Lang LaSalle said the property market finished the year with solid demand across the sector.
"The mid-to-low priced residential units, in particular, have remained generally healthy in the face of stiffer competition from new supply and more caution on the part of buyers," managing director Suphin Mechuchep said.
"The mass transit projects earlier approved by the interim government will have direct and tangible impacts on the Bangkok property market. These projects will boost government spending, resulting in more employment and stimulating the overall economy."
The post-coup government in November endorsed five rail lines in Bangkok worth 4.5 billion dollars, with construction on three of them set to begin in 2007.
The capital already has three rail lines -- two elevated and one subway -- which have helped fuel strong demand for urban condos throughout 2006, said property consultant CB Richard Ellis Thailand.
"Mid-end to low-end condominiums with proximity to the SkyTrain or subway stations have performed very well," the consultant said in a paper released earlier this month.
Richard Ellis also said hotels are one of the best-performing sectors in Bangkok, with three new hotels opened in 2006.
KGI's Patti said the property market would pick up in 2007, but said it was still "not bullish".
She expects the sector to grow by 5.0 percent in terms of market value -- in line with overall economic growth -- and almost 10 percent on units sold, she said.
But Kasikorn Research Center warned the Bank of Thailand's tough foreign currency rules could hurt the purchasing power of major property buyers.
To curb baht speculation, the central bank last week imposed a 30-percent reserve requirement on short-term capital inflows. The regulation caused a 15-percent plunge in the stock market that day and investor confidence has still not fully recovered.
"If the stock market remains sluggish next year, the wealth of middle-income people would be affected and they are the main buyers of the property market," said Pimonwan Mahujchariyavong, Kasikorn's head of macro-economic research.
"Sentiment is also critical for the residential business, which is a long-term investment," she told AFP.
Since the bloodless coup in September, which capped months of political turmoil, analysts said confidence among buyers has improved as the broader economy appears to be picking up steam.
Despite concerns over tough new foreign currency rules, an expected fall in interest rates and more stable oil prices could also benefit the overall economy and the property sector next year.
"Demand will pick up in 2007 from this year as interest rates are expected to be cut in the second quarter, while fuel prices are unlikely to rise further," said Patti Tomaitrichitr, a property analyst at KGI Securities.
"Consumer confidence has gradually recovered as political uncertainties diminished," Patti told AFP.
This year's market will be flat from last year with 68,000-70,000 units sold, she added.
Economists forecast that interest rates -- now at an eight-year high of 5.0 percent -- will drop by a quarter or a half point in the second quarter as declining oil prices ease inflationary pressure.
"The rate cut would boost consumers' purchasing power and stimulate their spending," said Athip Bijanonda, president of the Thai Condominium Association.
The property market could expand by 6.0 percent if rates were cut by 1.0 percent, he predicted, adding that interest rates are the only key factor affecting the property market next year.
Despite the political turmoil in 2006, real estate agency Jones Lang LaSalle said the property market finished the year with solid demand across the sector.
"The mid-to-low priced residential units, in particular, have remained generally healthy in the face of stiffer competition from new supply and more caution on the part of buyers," managing director Suphin Mechuchep said.
"The mass transit projects earlier approved by the interim government will have direct and tangible impacts on the Bangkok property market. These projects will boost government spending, resulting in more employment and stimulating the overall economy."
The post-coup government in November endorsed five rail lines in Bangkok worth 4.5 billion dollars, with construction on three of them set to begin in 2007.
The capital already has three rail lines -- two elevated and one subway -- which have helped fuel strong demand for urban condos throughout 2006, said property consultant CB Richard Ellis Thailand.
"Mid-end to low-end condominiums with proximity to the SkyTrain or subway stations have performed very well," the consultant said in a paper released earlier this month.
Richard Ellis also said hotels are one of the best-performing sectors in Bangkok, with three new hotels opened in 2006.
KGI's Patti said the property market would pick up in 2007, but said it was still "not bullish".
She expects the sector to grow by 5.0 percent in terms of market value -- in line with overall economic growth -- and almost 10 percent on units sold, she said.
But Kasikorn Research Center warned the Bank of Thailand's tough foreign currency rules could hurt the purchasing power of major property buyers.
To curb baht speculation, the central bank last week imposed a 30-percent reserve requirement on short-term capital inflows. The regulation caused a 15-percent plunge in the stock market that day and investor confidence has still not fully recovered.
"If the stock market remains sluggish next year, the wealth of middle-income people would be affected and they are the main buyers of the property market," said Pimonwan Mahujchariyavong, Kasikorn's head of macro-economic research.
"Sentiment is also critical for the residential business, which is a long-term investment," she told AFP.
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