The property boom in Bangkok continues, despite some experts’ fears of a property bubble, with the development of a new 77-storey tower that could grab the title of Bangkok’s tallest tower.
Scheduled to be completed in 2014, the MahaNakorn’s unique design is expected to stand out on the Bangkok skyline, according to Agence France-Presse (AFP).
The MahaNakorn stands at 315 metres and is valued at THB19 billion (US$640 million). It will house retail spaces, apartments and a Ritz-Carlton Hotel. The grand project is coming onstream amid the country’s apparent economy recovery, with gross domestic product (GDP) climbing 7.8 percent from 2010.
The Bank of Thailand considers 2010 a “golden year for real estate businesses” and pinpoints consumer confidence and low interest rates as the primary drivers of the increased demand for property and the lack of new construction projects.
The bank has assured investors that it is vigilantly watching for signs of a potential bubble but sees little to worry about. On the other hand, it expressed concerns about increased speculation from buyers.
It said that home buyers with “insufficient purchasing power or subprime customers” were convinced to purchase, while lenders ramped up the amount of loans to 90 percent or more of the property value.
To “maintain economic stability”, the bank has made high loan-to-value (LTV) lending costlier for financial institutions.
The Agency for Real Estate Affairs (AREA) said it has seen a build-up in oversupply and warned that it could become unsustainable.
Figures showed that Bangkok and its suburbs had more than 135,000 unsold properties in July, while another 100,000 properties are expected to arrive on the market by 2012.
“If something happened to our economy or politics, it could cause the bubble to burst,” said Sopon Pornchokchai, President at AREA.
Kobsidthii Silpachai, Head of Markets and Economic Research at Kasikorn Bank, noted that the country’s economic health indicates that it is in a better position than in 1997. He added that should the bubble burst, its impact will be limited.
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