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Don't bank on prices declining

Consumers and property buyers in Thailand may be feeling more upbeat since the change in government but an undercurrent of concern persists, and caution rules when it comes to making decisions, says Songkran Issara, the managing director of Charn Issara Development Plc.

The outlook should improve if nothing disturbing occurs from now until the next general election, which is expected to take place in a year's time, he believes.

Mr Songkran is concerned about the possible response to any anti-junta protests, and says the unrest in the South bears watching in case the violence spreads beyond the border region. "If people die in Samui or Phuket it will be a huge problem."

At the individual level, those planning to buy property should do so now because prices will rise if they wait around one and half years in the hope that times will be better then. It is also unlikely that construction costs will drop. "If you ask me, buy only what is necessary, but if you have spare cash you could invest, you have to assess your strength."

Mr Songkran reminds consumers that buying property is a long-term undertaking and one might not get returns the first two years. Whether one should take the plunge depends on whether one can wait three or four years to see some payback. "Those who have limited budgets will find that it isn't worthwhile investing that sum."

Property buyers should also check developers' track records to ensure that they actually build what they promise. On the other hand, buying something that is already built means fewer choices.

"If their track record is good you could buy earlier _ this is important."

While being concerned about the political situation, Charn Issara is confident enough of its stature in the market that it is launching new three condominium developments _ two in Bangkok and one in Cha-am.

Coming up in Sukhumvit soi 42 is Issara@42, a low-rise condominium with 69 two- to three-bedroom units from 77 to 100-plus square metres and prices starting at 5.7 million baht.

Another condominium will rise on the main road between Lat Phrao sois 12 and 14, just 400 metres from the subway station. Here prices start at 2.2 million baht for a 35-square-metre unit.

In Cha-am, the 14-rai Charn Talay estate will have six four- to seven-storey buildings next to the sea with 65 metres of beachfront. Here prices start at three million baht for a 55 sq m suite. There are also two deluxe 400 sq m units with private pools at 40 million baht each.

Mr Songkran is quite bullish about the Cha-am project because there is no new supply there. "Ours is probably the only project there, which is good _ low supply but high demand."

In Bangkok, Charn Issara is playing the skytrain-underground theme that is a big hit at the moment. While the Lat Phrao project is a little farther out from the very heart of the city, Mr Songkran pointed out that other major players have also drifted to this area and Ratchadaphisek.

As he sees it, the affordable condominium boom will continue for three to five more years with prices rising steadily and only dropping when they reach the same level as single houses.

The key reasons for this include lifestyle changes and higher petrol prices. Also a larger number of Thais can now afford to buy condominiums priced from 1-3 million baht, and such developments also attract foreign buyers.

The fact that condominiums are a lot easier to resell than single houses and townhouses is also propelling this segment of the market forward.

Charn Issara is also interested in expanding in Phuket where it is already marketing the Sri Panwa luxury residential project on Cape Panwa. As this estate comprises posh pool villas that are managed like a hotel, the company is looking for an opportunity to branch out and build condominiums.

Mr Songkran is also interested in Koh Samui, where a Charn Issara team is scouting locations. "If I develop there it would be a different type of product _ a condo or something."

However, he added that it is easier to develop real estate in Phuket where the company is already well entrenched because building up a new market among foreigners takes two years.

Charn Issara is among the very few major Thai developers in Phuket; most of the others are foreigners. Mr Songkran admitted that it is competitive but pointed out that foreigners too have weak points, chiefly a lack financing and sometimes a very ad hoc corporate structure. "Ours is solid and clients can see this."
Bangkok Post Dec.06