Floods have had a vast impact on the property market in Thailand with sectors affected across the board, according to international property consultants CBRE.
In the short term, residential project sales will slow down while the city is still affected by the floods, but in the medium to long term the crisis will have an impact on multiple levels from location to product and pricing, the latest analysis says.
There will be a change in demand patterns in terms of preferred location and product in Bangkok. ‘Buyers obviously will be hesitant to purchase in areas where heavy floods have occurred. The business areas of Lumpini, Silom, Sathorn and lower Sukhumvit will continue to be the preferred locations while other areas will be assessed once the flooding is over,’ says the report.
Buyers will pay more attention to design features and flood protection measures while housing developers need to ensure that both estate infrastructure and individual houses incorporate flood protection features when launching new projects, it explains.
Post flooding, construction costs are likely to rise due to a high demand for construction materials and skilled labour, particularly qualified technicians and contractors to rehabilitate damaged properties. Projects under construction in affected areas such as Rangsit and along the MRT purple line are temporarily halted and construction can only restart once the flood subsides.
Affordability and pricing will also be affected, particularly for the entry level and middle market. ‘The crisis will directly affect the spending power of those affected who may have lost their income or face additional expenses such as repair or replacement of damaged cars. This will slow down purchase decisions and shift the focus to lower priced products,’ the report explains.
At the higher end of the market, demand for second homes from wealthy Bangkok residents will rise, notably for city or resort condominiums. Resort markets such as Pattaya, Hua Hin and Phuket will benefit.
‘Overall, the market will likely see a shift toward condominiums and away from houses or townhouses, particularly among younger buyers. The perception will be that even if condominium buildings are inaccessible if flooding occurs, possessions and furniture will still be safe. This is not to say the market will completely turn away from housing developments, but we do expect housing sales to drop in the medium term until buyers’ confidence is restored and until developers can demonstrate effective prevention measures and designs that minimise flood damage,’ the report adds.
Article courtesy of propertywire.com