Property Market Flat Due To Currency Rates

April 8, 2010 - PRLog -- Property seekers should realise that the market has changed from two years ago when it was always a good time to buy and sell

The Bangkok property market holds low appeal these days to foreigners, who are more concerned about the strong baht than ongoing political problems, says Chris Heath, managing director of Soho Properties Company.

Although overseas buyers are a bit concerned about the red shirt demonstrations, the general opinion is that the protests will soon disperse. “There are a lot of problems, obviously one is the political scene, but the other thing is that the baht is very, very strong right now,” said Mr Heath.

This is particularly true for prospective British buyers, who are finding that the pound doesn’t buy nearly as much as it used to. Sterling today is trading about 48 baht, compared with more than 70 baht two years ago and 65 as recently as last year.

“I had a hotel deal going in Pattaya but amid the negotiations the pound dropped from 55 baht to 49 and it became too expensive just through the exchange rate,” said Mr Heath.

The strong baht, however, has led to the UK’s largest house builder, Berkeley Homes, approaching Soho Properties to promote sales of British properties in Thailand, because it now makes a lot of sense for a Thai to buy overseas and get good value for the baht now that prices in London and the US have dropped to record lows.

Mr Heath estimated that a 30 square metre studio in the outskirts of London can be had for 5 million baht these days. This is 40% cheaper than two years ago, with the exchange rate representing half the difference and the general decline in UK property prices the rest.

“For Thailand, probably the most interested people would be those who have children studying in the UK. So they can buy a home there and during the three years or so their children are studying they can live in it without paying rent, and when they have finished they have an investment they can rent out.”

Berkeley Homes had earlier planned to join a property exhibition at Siam Paragon but has put this off. Later this summer the company will conduct a regional promotion that will also cover Malaysia and Singapore.

This British company has already held a successful two-day show in Hong Kong where 40 units in the Docklands in London were displayed with prices averaging 10 million baht.

The current slide in the Bangkok property market has also affected rentals, because a lot of companies have reduced their housing allowances substantially, said Mr Heath. A foreign executive who previously had a housing budget of 100,000 baht a month is being allocated 70,000 baht these days.

“A lot of people are downsizing to cheaper units, but the thing is they still want a good central location and they want very modern and well-furnished apartments. We have found that some people are moving from very large units to slightly smaller ones or they are moving because they are getting a better deal somewhere else.”

Mr Heath has also noticed that a lot of companies seem to be selecting single employees or couples without children for assignments in Thailand because accommodation cost would be lower and there would be no cost for schooling, which is expensive.

While the Bangkok property market has been difficult lately, Soho Properties has been fortunate because it has some high-end customers and has managed to rent out some large units. “There are still high-end and low-end customers, but the middle range of customers seems to have dropped,” he said.

The company has also had an increase in the number of Indian and Chinese customers, said Mr Heath.
“I don’t know why but we seem to get a lot of Indian customers. A lot are looking for businesses – to open a restaurant, for example. Most of the deals we have done lately are not residential – we just rented out Dickens pub (in the Ambassador Hotel) and the supermarket next to Times Square.”

Negative reports about the nightlife in the stretch of Sukhumvit from Soi 1 to the Asok intersection do raise questions about how appealing apartments and condominiums in this area still are, he acknowledged, but said in general people still like the area because it is vibrant and busy.

“You have the subway, the BTS, the expressway is easy to get to from there, so you don’t need to go far. It’s probably the second largest business district after Silom. There are quite a lot of new businesses moving into the office complexes there – Citibank is moving in from Silom.
“So it shows you that this is becoming the second centre of commerce. You have also got the best restaurants around this way.”

Mr Heath warned property buyers to keep in mind that the market is difficult today and has changed greatly from two years ago when it was always a good time to buy and sell. Then buyers would get a property cheaper than they would the following month and sellers would always increase their investment.

Today real estate investors should choose the right type of property, one that can be leased easily. They should not focus only on getting a good price but on actually buying something that people want to rent.

“If you are buying it for your lifestyle then you know you can look around and make sure that you find something that is a good price and suits your lifestyle.”

He recommends that for investment one should avoid studios, which are too small for most foreigners. “If you are looking to invest and rent out to an expat customer one bedroom would be the smallest – one to two bedrooms.”

He added that the really small one-bedroom units that developers are currently building are not suitable for most Westerners, who prefer a unit of at least 50 sq m. Other factors include transport, building management and quality of workmanship.

“For the long-term view Bangkok is a very good place to invest in because it is still very cheap for office and residential properties compared to a lot of Asian capital cities.”

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Soho Properties is a leading Bangkok property real estate agent and location specialist, offering a first-class service for all your property-related needs.
http://www.soho-properties.com