Developers expect recovery in 2012

The property market is likely to recover in 2012 after being hit by the floods this year.

The market in Bangkok and its suburbs dropped between 20 and 30 per cent from last year due to the decline in demand for residences in October and November following the floods. 

Meanwhile, some home-buyers will have to spend their budget to renovate their current residence and explore which location was not hit by floods. 

Most leading property firms believe that demand for residences will revive in the second quarter of next year.

SC Asset Corporation’s chief operating officer, Kree Dejchai, said that buyers would return to the market in February 2012, or in the second quarter of next year.

“Now, home-buyers are in a state of shock after the floods but they will soon study which areas were spared inundation and make their decision,” he said.

However, he believed that home-buyers will not change their preferred location because of the floods as they want to stay close to their family and community and familiar location. But they will buy from property firms who managed to protect their projects from the flood or took care of the customers during the crisis period. 

Sansiri’s president Srettha Thavisin also believed that the property market would recover in the second quarter of next year when home-buyers recover from the floods. 

He said buyers’ preferences will not change and those who love to buy low-rise residences such as single detached house, twin house, and townhouse will continue to make that choice, while home-buyers who love condominiums will buy condos, he said. 

“Some home-buyers who live in low-rise residences might decide to buy a condominium as a second home but that depends on their purchasing power,” he said.

Asian Property Development’s CEO Anupong Asavabhokin also believes that the property market will recover next year, either in the first quarter or the second quarter. 

He does not expect demand to buy residences to change from low-rise residences to condominium projects but buyers may select locations that were spared the flooding or choose developers who were responsible with their residential projects.

“This flood crisis showed who are the property developers who took care of their customers,” he said. 

 

Redesign needed

Meanwhile, Sansiri president Srettha believes that the design of residential projects will have to change to offer protection against floods, including increased land fill, and use of technology to design the projects to deter flooding. This will be the selling point for residential projects next year.

Pruksa Real Estate president and CEO Thongma Vijitphongpun said the company has to redesign its residential projects to protect against flooding, such as increasing land fill and design project landscape to have floodways. This will protect residential projects from flooding.

 

Construction cost and residential price rising

Redesigning will increase construction cost between one per cent and three per cent. Meanwhile, land price at the location that did not face flood also will go up. This will drive up prices of residences in some locations.

SC Asset Corporation CEO Kree said that residential price next year will increase between 3-5 per cent due to rise in construction cost, new design and labour cost.