Metro Bangkok property may see 33% plunge

Moreover, the home-building market has projected a drop of 15-20 per cent from the previous estimate of Bt12 billion.
The total value of the metropolitan Bangkok property market was reported at Bt390 billion last year.
Kittipol Pramote na Ayudhya, president of the Thai Real Estate Association, said that even without the flood impact, the value of the property market in Bangkok and suburbs was predicted to drop by 20 per cent from last year’s figure to Bt310 billion this year. But as the flooding worsens, the market is projected to drop beyond the previous estimate, because many people have delayed decisions to buy. Some have also delayed taking possession of new homes because of flood damage.
“Our prediction was based on statistics when residential transfers during the first seven months of this year reached Bt180 billion. However, the severe flooding now has directly affected decisions of home-buyers to transfer,” he said.

materials, labour shortage
Meanwhile in areas not actually flooded, the property market faces two main problems. First is a shortage of construction materials such as lightweight blocks, sand and cement, as manufacturers of these products are mainly in flooded areas, including Ayutthaya and Pathum Thani, Kittipol said.
The other problem is a shortage of labour, as a number of workers left when flood waters entered construction sites.
Business Housing Association president Issara Boonyoung said property
firms would face problems from both supply and demand. In terms of supply, they cannot proceed with construction because of the shortage of labour and materials. At the same time, demand has dropped by more than 50 per cent because it is difficult for potential buyers to visit housing projects.
Pramote Teerakul, managing director of leading home-builder Four Pattana, said construction contracts with landowners set to be inked in the current fourth quarter would also be postponed, while those for which construction is already underway would also be delayed because of the shortage of construction materials.
“The construction-material suppliers are unable to deliver their products, either because their factories are inundated or transport is disrupted,” he said.

Targets may be lowered
Given these market trends, property firms may have to revise downwards both their presale and revenue targets for this year.
Pruksa Real Estate is studying the impact of the flood on its business and may lower its presale target but has to wait for the situation to stabilise before doing so, said the company’s director and chief business officer, Prasert Taedullayasatit.
Asian Property Development chief financial officer Poomipat Sinacharoen said demand for its low-rise residences might drop from its earlier estimate. However, there may be little overall impact on its presale and revenue targets as its condominium projects have continued to see presale growth.