The real estate market in Thailand is, like real estate in the rest of the world, experiencing a slowdown. According to real estate company CB Richard Ellis (NYSE:CBG), the slowdown in Thailand will continue at through 2009 and probably into 2010. Recently released research from the firm indicates that transactions were down in the final quarter of 2008 and estimates that the market could drop as much as 10-20 percent during 2009.
Aliwassa Pathnadabutr, managing director of CB Richard Ellis in Thailand, indicated that this slowdown should see a faster recovery than the one that occurred in 1997. “We believe that this recovery cycle will be faster than that after the 1997 financial crisis because global leaders such as the US, UK, Europe, Japan and China have launched measures to solve the problem. Meanwhile, Thailand’s property developers and finance firms are healthier, financially, than they were in 1997,” she said.
One major market sector that has been hit hard by the slowdown has been Bangkok’s downtown condominiums. At the end of 2008, there were between 6,000 and 7,000 unsold condos in the city, and it will take some time for that backlog to clear. For those looking for a bargain, it provides an excellent opportunity, though.
Buzz Inc (OTC:BZTG) will expand the One-2-Property brand through their own developments working in partnerships and joint ventures and with out any debt or capital raising. Buzz Inc has several property ventures including One-2-Property and Real Estate News Network (RENN). Sutida Suwunnavid of One-2-Property said, ” we have invested in a number of projects in various forms, predominantly through the Buzz Marketing Partner Program, we have made some direct investment as well and feel these will be strong income producing assets for the company before 2011″
” Buzz offers a new level of marketing both online and offline for clients and developers, this has seen a surge in interest during hard times as we are always happy to take equity in exchange for our services’ said Thanissara Sinprasertwong of One-2-Property.
Buzz expects to significantly increase property holding during the current economic downturn using the company’s strong cash position and the increased ability to exchange services for equity.
Many companies in Thailand have planned bond and equity raisings to fund expansion, including Hotel operator Grand Asset Development GRAN.BK up to 12 billion baht of 2-year bonds to fund expansion.
Sansiri SIRI.BK is to sell up to 3 billion baht of up to 10-year bonds for working capital
Thailand’s second-largest property developer also planned a 1 billion baht ($28.6 million) bond issue later this month to help finance the projects along with cash and bank loans.
Thailand real estate company Preuksa Real Estate PCL PS.BK forecast a 31 percent rise in 2009 revenue on Thursday, above analysts’ expectations, and it plans 15 billion baht ($430 million) in new housing projects during the year.
“We aim for revenue of about 17 billion baht this year,” President Thongma Vijitpongpun told reporters after the company posted estimated revenue of 13 billion baht for 2008.
Broker Kim Eng Securities expects revenue of nearly 15 billion baht this year for the Bangkok-based developer, which builds and sells townhouses, single-detached homes and condominiums.
Among the 22 projects planned for 2009 is a 1.2 billion baht development of single detached houses and townhouses in India, which is scheduled for pre-sale late in the first quarter or early in the second quarter.
The company was also considering a joint-venture condominium project in India, and studying other projects in Vietnam, China and Indonesia, but it gave no details.
Preuksa had 11 billion baht in pre-sales at the end of last year, of which 8.4 billion baht would be booked as revenue in 2009 and the remainder in 2010, company officials said.
They forecast a net profit margin of more than 14 percent for 2009, flat on last year.
The government has promised tax relief for developers as part of a stimulus package for Thailand’s economy, which is expected to barely grow in 2009 due to the global economic slowdown.
It recently extended tax breaks for developers by another year to March 2010 and has asked commercial banks to approve more loans.
Chief Financial Officer Somboon Wasinchutchawal said the 1 billion baht in bonds would be sold from Jan. 26 to 28, with a coupon higher than 5 percent.
The bonds will have a greenshoe option for a further 200 million baht, he said. ($1=34.84 Baht)
