Thai property market recovering but global downturn and political unrest has pushed prices in some areas down to 2007 levels, report shows

All major developers are reporting stronger sales than expected after a dismal end to 2008 but lack of finance could end up hindering the tentative recovery, according to a report from publicly-listed Thai condominium developer, Raimon Land.

In the first few months of 2009 pre-sales more than doubled compared with the last quarter of 2008, signalling that the market has already bottomed out, the report says. The outlook for developers has also improved due to lower costs for materials and construction along with reasonably priced plots of land, it adds.

The Bank of Thailand has lowered interest rates four times since December 2008 and a government stimulus package that reduces the Special Business Tax from 3.3% to 0.11%, extends the reduction on transfer taxes from 2% to 0.01%, reduces mortgage registration fees and reduces tax on mortgage interest is having an effect.

Overall the report describes the outlook in Thailand as positive and remarks that off-plan sales, which had been negative, now have a high up-take at 73%. Indeed in some areas demand is leading to increased prices. In central Bangkok, for example, the average price per square meter is being driven upwards by the demand.

But the report also points out that some parts of the country are facing a more mixed market. In Pattaya the real estate market has suffered from a decrease in tourism numbers of 16% and the region is more susceptible to the global downturn and political unrest. Although Russian, British and Chinese investors are still buying.