PROPERTY BANGKOK REPORT APRIL 2009:

The housing situation in Thailand is looking bleak for homeowners who are paying mortgages off. More jobs are going and unemployment is starting to increase. The government has helped the workers by their 200baht per each social welfare worker fund but this is only a temporary measure. The Red shirts of Thaksin are mobilizing to upset the Country even more so the country could find themselves in more of a mess. Is it a good time to buy---only if you have adequate funds and buy a condo but do your homework first.

Amata forecasts 50% plunge in sales
Bangkok Post Mar 20, 2009

Auto slump deals heavy blow to firm Amata Corp, the country's leading industrial estate developer, anticipates that its sales could fall over 50% from 4 billion baht last year, due to the automotive industry's severe slump, said chief operating officer Viboon Kromadit. ''In the first quarter, we haven't sold even a single rai of land in our two estates,'' he said yesterday.

He added that 40-50% of the company's industrial estate clients were in automotive or related industries, while automakers have announced average cuts in production of 30-40%. At present, 70% of Amata's income comes from land sales at its two industrial estates _ Amata City in Rayong and Amata Nakorn in Chon Buri. Although it has made no sales so far this year, the company hopes to sell about 50 rai in the first-half of 2009. Over 2008, it sold more than 800 rai.

In 2008, the company posted 4 billion baht in revenue, a 40% decrease from 2007. However, its net profit rose 16% to 1.2 billion baht, due mainly to a cost reduction programme.

''The current situation is very likely to drag on to the third quarter. We don't think there will be any sign of recovery until then,'' Mr Viboon said. Worse yet, he said the company must keep watching giant carmakers like GM and Chrysler, which are still on the verge of collapse.

''If they can't make it, the deep impact would badly hit hundreds along the supply chains,'' he said.
For instance, a big Japanese auto-parts maker with over 10 billion baht invested in Rayong has shown clear signs of needing to shut down production here soon, he said.

''Next week, probably we may see the clear situation _ whether it will survive or not,'' he said. He declined to name the company. He added that the recession in Japan has hurt the company badly, as 62% of the 672 manufacturers in its two industrial estates are majority-owned and operated by Japanese companies.

''The government really needs to work hard on how to keep Japanese investors running businesses here. They are one of the strongest parts of the Thai economy.''To ease its current pressures, Amata is focusing on saving costs. It has also cut rent for manufacturers in its estates to retain recurring income.
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No homes to go to
DAILY XPRESS/The Nation March 20, 2009

Greedy real estate developers and a muddled government is leaving poor families out in the cold, say experts

The economic downturn has resulted in a 50-per-cent drop in house sales in Thailand, compared to the peak volume before the 1997 crisis, a recent Bangkok housing seminar was told. Somchao Tantherdtha, chairman of the Thai Real Estate Association, said the drop was mainly due to banks' tighter loan policies, and homebuyers being unable to pay instalments in these tough times. Clear and consistent government policies on housing were vital for economic growth and employment, he told the seminar of more than 300 real estate developers, government officials and academics from around the world.

Policy in chaos

Professor Pree Buranasiri, a former National Housing Association governor, said government support and soft loans were needed so that low-income earners could buy homes more easily.
He attacked the government's lack of coordination, saying there were 28 departments under 14 ministries and six independent organisations involved in working out the national housing policy.
Pree said that the average size of a Thai home was 32 square metres but that dropped to eight sqm in the case of a low-income family of four.

More homes needed

Somchai Jitsuchon of the Thailand Development Research Institute said that the widening income gap meant more homes for low-income earners were needed as more people migrated to Bangkok to seek work. He also expressed worries about the mental health of children living in low-cost NHA apartments. Pree said key NHA housing projects in Samut Prakan's Bang Phli district and Nawa Nakhon in Pathum Thani were failing residents. Incumbent NHA governor Suchart Siriyophan brought some good news, telling the seminar that 120,000 homes would be built next year if a Bt30-billion budget was approved.

Ignoring the poor

On the real estate front, Dutch analyst Cor Dijkgraaf drew parallels between the US subprime crisis and the collapse of the Thai economy in 1997. Over-investment in real estate played big factors in both crises, he said, adding that developers had sunk their money into niche-market housing while ignoring low-income earners.
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Buybacks could aid owners
Bangkok Post Mar 21, 2009

Homeowners struggling to keep up with their payments could benefit under a novel proposal by the second-hand property brokerage Realty World Alliance. Visit Kunatharakul, the company's president and managing director, believes investors could be encouraged to buy houses and rent them back to those who risk losing them, with a buyback option effective for around three years.

Mr Visit gives the example of someone who bought property for around 1 million baht and would be paying approximately 7,000 baht in monthly mortgage installments. But if that person loses his job or his income drops, an investor could step in and buy and rent back the property at, say, 4,000 baht a month, until the original owner's circumstances improve.

"If they reach a certain point, lose their jobs or are laid off and don't have enough money to pay the installments they have to resolve the problem. If not their property turns into an NPL," he said.

"If at that point it is not resolved, then the property is sold in the market and they won't have a home anymore, and with their credit standing in tatters they won't be able to borrow to buy a new one. "But if they have the right means to solve the problem they would be able to buy a house if they get a new job when the economy recovers, and it could be the old one or a better one. They could ask to be allowed to buy back in three years' time at a certain price and in the meantime be allowed to rent. "As for the investor, he would have collateral ... and right now putting money in the bank only yields 1-2% interest. But if they buy a house for 1 million baht, they get 4,000 baht a month which means 5% a year, and they could sell it back to the previous owner at a premium if they get the opportunity. This is better than not resolving the problem." Mr Visit questioned why the government has not helped lowest-income earners, saying his strategy is much better than letting NPLs mount up.

"The Government Pension Fund has money and can invest in property and so does the Social Security Fund. They have hundreds of billions baht, so why not set aside 10 to 20 billion to help the people and enable them to rent? The funds have members, help them first, they have been paying into the fund every month and they are facing problems so help them." While housing prices are down, Mr Visit said the fall is only about 5%, not as much as people are hoping for. And when a good property does come on the market, people are still competing to buy it, he said. "You noticed Noble's latest project in Soi Ari, they sold out in three hours, more than 100 units costing more than a billion baht. This is possible because there is still demand but the location has to be right. Noble didn't reduce the price but people were fighting to buy."

Mr Visit also noticed that land sales have picked up lately, possibly because those who have savings lack good investment choices, given volatile stock markets and poor bank interest rates. They hope that land values will climb in the long term. This group of buyers is mainly focusing on the inner areas of Bangkok and if they look in the suburbs it would be in well-populated areas that show commercial potential such as a good chance to build an apartment building. Realty World itself is not opening any more offices this year but it is still hiring more staff because it obtained a non-performing asset (NPA) portfolio worth 6 billion baht from a financial institution to manage. It plans to auction some of these properties in June.

.LAND AREAS: 1 rai = 4 ngarn = 400 wah2 = 1600 m2; 1 talang wah = wah2 = 4 m2; 1 acre = 2.53 rai & 1 ha = 6.25 rai 
To date foreigners may own

  - a unit in a registered Condominium

  - a building (as distinct from its land)

  - a registered leasehold of up to 30 years for all types of titled land (and/or buildings).

  - a company can purchase land and buildings only.

  - more than 49% of a condominium unless in Company form.If BOI status different

 - foreigners can own land being not over 49% in a proper Business orientated company but cannot secure a mortgage. Under BOI can buy.

  - if you invest 40m baht you can buy 1 Rai of land in Thailand outright

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