New condominium projects are sprouting up across the Thai capital, but investors and developers are not too worried about a property bubble forming.
Property stocks in Thailand have been strong with the real estate stocks index up 28 percent in the last three months. A number of listed firms have also raised their profit estimates, confident of taking advantage of an insatiable local demand.
Other Asian nations that are concerned of housing affordability and asset bubbles have attempted to yank back their markets, with Singapore being the latest country to introduce a set of tightening measures. Analysts, however, said that Thailand is unlikely to follow suit.
“Interest rates are still low. There’s still huge demand, particularly with units from listed companies. Growth in the property market tends to move in tandem with GDP and the economic fundamentals are more sound now,” said Sorapong Jakteerungkul, a property analyst at Kasikorn Securities.
The only move of the government is to increase its key policy rate from 1.25 percent by half a percentage point, which is still low amidst recovering consumer spending.
“Lifestyles are changing and there’s not been many obstacles for young workers and first-time buyers with low purchasing power to get credit,” he said.
Based on data from the Bank of Thailand, the number of new condo units in Bangkok increased to 13,028 in Q1 2010 from 3,389 in Q2 2009, when the country emerged from its first economic slump in 11 years.
The recovery of the Thailand market revives memories of a bubble that triggered an economic storm in Asia, hitting Indonesia, Malaysia, South Korea and the Philippines.
Buildings across Bangkok were abandoned midway through construction, while Asian banks struggled to drop bad loans.
This year, equity strategists and economists say that the Thai economy is stronger, boasting large foreign exchange reserves, strong financial markets, almost record low interest rates and large trade surplus.