Bangkok Apartments | Bangkok Condos | Bangkok Serviced Apartments

THAI MARKET BUOYANT COMPARED TO LONDON

Bangkok Post Apr 26, 2009 Plummeting sales in the UK make local market look good. Thailand may be facing severe economic and political challenges, with an inevitable impact on the real estate market, but prices are still holding up reasonably well when one looks at conditions elsewhere. THE VIEW FROM LONDON: Jeremy Helsby, group chief executive of the international property company Savills. Jeremy Helsby, group chief executive of the international property company Savills, notes that conditions are far worse in his home country. Speaking during a recent visit to Bangkok, he said that prices of prime commercial office buildings in London were off by 30%, and by much more for the secondary buildings. "In some cases it's more than 50% because they are unsalable." At the moment only good property is selling in London because there are no takers for what is not prime - a complete reversal from two years ago when everything could be sold, bad as well as good. "What happens in a bad market is the good stays good and the bad just falls off the cliff as we say in England, so it gets very bad," he said. Mr Helsby added that if the fall in the value of the pound is combined with the fall in the value of property, then commercial property in London is today 50% cheaper than it was 18 months ago. London's residential market is in no better shape with prices down by 30-35% over the last 18 months - 50% if sterling's slide is taken into account. Problems that the British property market is currently facing are worsened by the difficulty potential buyers have in borrowing. "So that's the problem we have in England at the moment, it isn't just values, it's turnover, the volume of transactions has fallen by 50% as well - we have 50% fewer transactions and a 50% drop in values," said Mr Helsby. Although London is in a far worse position than Bangkok, it is able to attract international buyers because it will always be a city where people want to invest regardless of the economic situation. "So now we have a strong market for good buildings, we have international buyers wanting to buy, we have buyers from Germany, buyers from Switzerland, we have buyers from Asia, we have Middle Eastern money, we have US money, so international investors like London - it's a very popular city." But of course, 50% cheaper in the British capital is still very steep by Asian standards - a one-bedroom flat in the posh Mayfair area costs between 500,000 and 1 million (25.8 to 51.6 million baht). "We sold a house to an overseas buyer in London last week for over 20 million, so in London there are quite a lot of houses in Mayfair, in good areas, between 10 million and 30 million." While Thais worry about their economic and political future, the perspective of someone sitting in London is that this country has barely been affected by the global economic crisis. "You may think it's bad but I don't think you have had one bank that has had to be nationalised." Mr Helsby realises that exports and tourism have been knocked down by both the global economic turmoil and domestic political tensions. But he believes the situation here will change when the global economy starts performing better. "When America starts spending more they will start buying all your exports. Until that happens you are going to have a tough six months." Savills sees the current downturn to be an opportunity to expand its business because other firms are in trouble and the cost of workers and running a business is cheaper. Mr Helsby added that Asia has had a bubble developing over the past few years both in Thailand and the region as a whole. While this region has problems right now similar to the rest of the world, historically Asia has always reacted more quickly and also recovers faster than the West. "So I think what will happen is, yes, you will have more pain here the next six months or so but then when life gets better it gets better quicker in Asia and when it gets worse it gets worse in Asia. "I can't comment on Bangkok specifically but as a region I think over the next two to three years you will bounce back and when you do bounce it will be quick - the question is when will it start." In Mr Helsby's opinion those able to hold on to both their commercial and residential properties will start seeing prices rise again by 2010 and 2011. "What I don't think you will see is prices going back to the peak that they were 18 months ago. So, yes, prices will rise but they will not rise to the highest levels that they were 18 months ago." While local players have mixed views about which segment is hardest hit, Mr Helsby clearly sees the low end to be facing the most difficulties, a condition underscored by what is happening in London. "The bottom end of the market is very difficult, you know 100,000 and really the cheapest houses, you know that market is terrible, people can't get mortgages and we are starting to see repossessions. So you do have a two-tier market - the bottom is really bad and the top is bad but not as bad." While in Thailand most buildings are privately owned by families, he pointed out that in other Asian countries, particularly Singapore, Hong Kong and Japan, both international investors and locals own properties. However, because international investors are currently out of this market, Mr Helsby expects rich Asian buyers to emerge and buy not just in Thailand but across Asia over the next six months because they have no competition from other international investors.

 

< Prev		Next >