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PROPERTY MARKET: Housing boom continues to gather pace
Published on Aug 20, 2003, the Nation Reivew

The value of the property market this year will exceed Bt64 billion for the first time since the beginning of the Asian financial crisis in 1997, according to propertydeveloper Agency For Real Estate Affairs.

Agency said it expected the market to be worth Bt74.74 billion by the end of the year compared with Bt64.61 billion at the onset of the crisis.

In the first half of this year, the value of the property market stood at Bt42.81 billion from the sale of 19,916 units in the Bangkok Metropolitan area alone.

Managing director of Agency Sopon Pornchokchai said that housing demand had continued to grow by 30,000 to 40,000 units a year, depending on price and loca¬tion.

According to research by the company, the top five prime locations in and around Bangkok for homebuyers are Rangsit, Chaeng Wattana, Bang Bua Thong, Hatairat and Sukhapiban 2 and 3.

The main reasons given for choosing these locations were good transportation and proximity to their places of work.

The survey was conducted on visitors to five home exhibitions in Bangkok during the first half of the year.

The increase in demand is mainly seen in the luxuryhousing segment, which has prices ranging from Bt3 million to over Bt5 mil¬lion per unit, said Sopon.

Projects in this sector, he said, had kept their value unlike lowerpriced projects – up to Bt1.5 mil¬lion in value – which saw a decrease.

He said the company had researched the present value of luxury houses bought in 1992 and found that the market value of some had increased up to 107 per cent by 2002.

Meanwhile the value of lowerpriced housing dropped at least 30 per cent from its 1992 value.

In other words, luxury houses hold their value better than lowerpriced houses, he said.

Sopon said that according to his firm's research, in the first half of the year 93 per cent of homebuy¬ers had bought for themselves while 7 per cent planned to speculate.

He said that this was better than in the year before the crisis, when 40 per cent of buyers bought for speculative purposes.

This means that there was real demand in the market, he said.

However, prices are set to increase in the next two or three years in line with the price of con¬struction materials, which have increased by 40 per cent since 2001.

He said that propertydevelop¬ers could not increase their house prices now because of increased competition from a number of landdevelopers.

But prices will increase if the property developers cannot generate profit from their business.

Recently Anant Aswabhokin, president and chief executive of Thailand's largest landdeveloper Land and House Plc said that house prices would not increase because of stiff competition.

Anant said he also believed that the current property market boom was not a bubble like that of 1995, which finally burst in 1997.

With the booming market, Golden Land Property Development Plc, a small propertydeveloper, said yesterday that it expected to double its net profit this year.

“It's a good time for us to be aggressive,” said executive director of business development Phongchai Kunakornporamut.

The company also expects profit next year to grow by almost 100 per cent due to big projects, he said.

Golden Land reported a 78percent rise in net profit for the first half of this year to Bt207.6 million.

The net profit for the whole of 2002 was Bt252.6 million.

Last week a number of propertydevelopers who listed on the Stock Exchange of Thailand, recorded net profit growth of at least 20 per cent in the first half of this year compared with the same period of last year.

Land and House was one such success, posting a net profit of Bt2.7 billion, a rise of 75 per cent.

Meanwhile Lalin Property Plc recorded a net profit of Bt256 million, a rise of 58 per cent.

All of these firms have expanded business by targeting the luxuryhousing segment, which includes single houses and condominiums.

Somluck Srimalee

The Nation

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