by Daryl Lum | Oct 27, 2023 | News
In the third quarter, housing developers’ sentiment for the next six months saw a decline, primarily driven by growing concerns about employment following the government’s announcement of a minimum daily wage of 400 baht for the next year. Vichai Viratkapan, the Acting Director-General of the Real Estate Information Center (REIC), reported that the sentiment index for the upcoming six months dropped to 60.1 in the third quarter of this year, down from 62.1 in the previous quarter. Nevertheless, it’s worth noting that the index remained above the median of 50.0, indicating that developers still maintain a positive outlook on the overall property market for the next six months.
Among the six issues addressed by the REIC in its survey of both listed and non-listed developers, employment recorded the most significant decrease, falling from 62.1 in the second quarter to 56.8 in the third quarter. Songkran Issara, CEO of SET-listed developer Charn Issara Development, expressed his concerns about the policy to increase the minimum daily wage, emphasizing its potential impact on the overall economy.
According to Mr. Songkran, the wage hike’s impact will be substantial, given that the economy has not yet displayed robust growth or the necessary momentum to absorb additional costs, which would result in increased labor expenses for business owners. He also highlighted that the country’s economy has shown signs of recovery from the impact of the Covid-19 pandemic, largely driven by the resurgence of the tourism sector. However, global sentiment remains unfavorable, and concerns persist, both domestically and internationally, including conflicts and disputes such as the situation between Israel and Palestine.
The REIC’s report further reveals the second-largest drop in the expectations index, particularly in performance, which decreased from 69.4 to 65.0.
Mr. Vichai pointed out that the expectations index on costs was the only one to rise, with a 2.1-point increase. This suggests that developers may be able to achieve greater cost reductions compared to the second quarter.
The REIC also documented housing developers’ sentiment index regarding the current situation, which slightly improved to 49.7 in the third quarter from 47.5 in the second quarter but declined from 51.8 in the third quarter of the previous year.
Mr. Vichai attributed this decline to the fact that interest rates had been raised five times from 1.25% to 2.5% in the third quarter. Among these indices, only the current situation index for employment and the launch of new projects or phases exceeded 50.0, while those concerning performance, employment, cost, and the launch of new projects or phases showed improvement compared to the second quarter.
Yours sincerely,
The editorial team at IBP Real Estate Co., Ltd.
by Daryl Lum | Oct 16, 2023 | News
The US dollar saw a decline as the 10-year US Treasury yield dropped to 4.65% yesterday. Nevertheless, Poon Panitpiboon, a currency analyst at Krungthai Bank, has advised caution regarding the Thai Baht, indicating that it could face downward pressure should the Israel-Hamas conflict escalate, resulting in higher oil prices that adversely affect Thailand’s current account balance.
Simultaneously, the flow of foreign funds into the Thai stock market is expected to remain volatile, following the recent pattern of alternating periods of net buying and net selling. Additionally, importers may gradually increase their purchases of US dollars as the Baht strengthens.
Given these factors, Poon estimates that the Baht’s resistance level is likely around 37.25 per dollar. It is not anticipated that the Thai currency will weaken beyond 37.50, and there is a possibility of testing the support range of 36.25-36.30, according to Poon.
Whether a rising Thai Baht (THB) is good for Thailand can be a complex issue with both advantages and disadvantages. It’s important to note that economic conditions are influenced by a multitude of factors, and the impact of a stronger currency can vary depending on the context and the specific circumstances. Here are some potential effects:
Advantages of a Rising Thai Baht:
- Lower Import Costs: A stronger Baht can lead to lower import costs for Thailand. This benefits consumers as it makes imported goods, including raw materials and technology, cheaper.
- Inflation Control: A stronger currency can help control inflation by reducing the cost of imported goods and services. This can be beneficial for the overall stability of the economy.
- Attracting Foreign Investment: A stronger Baht may attract foreign investment, as it reflects economic stability and can increase the purchasing power of foreign investors.
- Reduced Debt Burden: If Thailand has significant foreign-denominated debt, a stronger Baht can reduce the cost of servicing that debt.
Disadvantages of a Rising Thai Baht:
- Exports Become More Expensive: A stronger Baht can make Thai exports more expensive for foreign buyers, potentially leading to a decrease in demand for Thai products and a negative impact on export-oriented industries.
- Tourism Impact: A stronger currency can make Thailand a more expensive destination for foreign tourists, potentially reducing tourism revenue.
- Negative Impact on Local Manufacturers: Export-oriented industries, such as manufacturing, may face increased competition and reduced profitability due to a stronger Baht.
- Economic Imbalance: A rapid and excessive appreciation of the Baht can lead to economic imbalances, potentially causing challenges for certain sectors of the economy.
Ultimately, the impact of a rising Thai Baht depends on various factors, including the pace and extent of the appreciation, the structure of the Thai economy, and government policies. The Thai government and central bank can use monetary and fiscal policies to manage the exchange rate to achieve their economic goals. They often aim for a balance that supports economic growth, controls inflation, and maintains a competitive export sector.
It is important to note that the Thai Baht has seen periods of sustained strength against the US Dollar. It follows that a strong Thai Baht cannot be viewed in a vacuum as a solely good or bad thing. However, if you are a foreigner looking to invest in Thai properties, it would serve you well to purchase Thai properties at periods when the Thai Baht is relatively weak as compared to your home currency. This is because you will need to make the purchase in your home currency. If there is any appreciation that was to occur to the Thai Baht subsequently, you will not only enjoy the appreciation in literal price but also the appreciation that happens due to the rise in the exchange rate.
The Thai Baht is hovering close to 5-year lows against the USD. This should be something that foreign buyers of Thai property will need to take note of. It could be a good time to enter the Thai property market if that is your immediate to short-term goal. This would allow you to enjoy not just possible capital appreciation but if the Thai Baht starts to appreciate, you will have more of your home currency when disposing of or renting your Thai property.
Yours sincerely,
The editorial team at IBP Real Estate Co., Ltd.
by Daryl Lum | Oct 11, 2023 | News
Chinese real estate investors who once dominated the market for luxury condos and apartments in Thailand are now scaling back their activity due to China’s economic downturn and the real estate turmoil there.
Conventional English-speaking nations such as Australia, Canada, the United Kingdom, and the United States have become more appealing to Chinese property buyers, overshadowing Thailand’s popularity.
In contrast to Thailand, Vietnam has experienced consistent interest from Chinese investors in apartment purchases, especially in major cities like Hanoi and Ho Chi Minh.
Thailand, which previously held the top spot for Chinese investors, has now slipped to fifth place, with Australia, Canada, the UK, and the US taking precedence.
Chinese buyers are increasingly acquiring homes in Australia for personal use or to secure Australian citizenship.
Over the past few years, Thailand had been a favoured choice for Chinese investors seeking residential properties. A real estate agency report revealed that Thailand was the preferred destination for Chinese buyers from 2018 to 2021. However, by 2022, Thailand had fallen to fourth place, and in the first half of 2023, it descended further to fifth.
China’s economic difficulties, encompassing issues like high youth unemployment, diminishing exports, and a real estate crisis, have raised concerns about its economic growth stalling.
Consequently, Chinese investors are becoming more cautious about ventures in Thailand, leading to prolonged deal closures. The long-term consequences will hinge on the actions of Chinese investors and how Southeast Asian nations navigate the aftermath.
by Daryl Lum | Sep 27, 2023 | News
On Monday, Chinese tourists arriving in Bangkok were personally welcomed by the Thai prime minister as part of a new visa-free initiative aimed at revitalizing the country’s crucial tourism sector. Prime Minister Srettha Thavisin, accompanied by traditional dancers, warmly greeted visitors from Shanghai at Bangkok’s Suvarnabhumi airport, even distributing welcome gifts.
One visitor, Zhuang Pan, aged 31, expressed her surprise and joy at the reception, describing it as an excellent beginning to her trip. Jin Li, who was on her honeymoon, shared her enthusiasm for the scheme and managed to capture a photograph with Prime Minister Srettha. She mentioned that the new visa-free policy allowed her to travel without worrying, as all she needed to do was book a ticket.
Before the COVID-19 pandemic, Chinese tourists constituted the largest group of visitors to Thailand, and tourism accounted for approximately 20 percent of the country’s GDP. However, the tourism sector suffered greatly due to travel restrictions imposed during the pandemic, and its recovery has been slow, influenced by global economic challenges and safety concerns stemming from a popular Chinese thriller about a man being abducted and forced to work in a Southeast Asian online scam operation.
One visitor, Zheng Zhengzhou, aged 36, acknowledged his awareness of the safety concerns associated with Thailand, referencing the movie “No More Bets” that had unnerved many tourists. He admitted to having some safety-related concerns but still chose to visit Thailand.
Prime Minister Srettha has consistently emphasized the importance of tourist safety, highlighting that the security of visitors from the moment they set foot in Thailand until their departure is a top priority.
Chinese visitors were not only greeted by traditional dancers but also by tourism police officers who provided information about a 24-hour police hotline.
The visa-free program was launched in time for China’s “Golden Week” holiday season in October and is set to run until February 29. Srettha reported that bookings had already increased tenfold under the program, expressing confidence that it would significantly boost the economy. He concluded by stating that it marked a positive day for Thailand, and he hoped that other policies would continue to stimulate the economy.
by Daryl Lum | Sep 18, 2023 | Others
Some clients have been asking us about this developer. While we are not 100% sure whether the information we have is accurate as of today, we believe that what we have to share in this blog article may be of use to those who are looking to purchase a property from Risland.
On LinkedIn, Risland is listed as a large-scale global real estate group headquartered in Hong Kong with operations in the United States, New Zealand, Thailand, India, and Vietnam. Risland delivers high-quality residential real estate projects, commercial real estate operations, property management, home building, construction management and diversified industry.
https://www.linkedin.com/company/rislandus/
Risland started from Australia. Risland Australia is the name given to the entity by its parent company, Country Garden. Country Garden is a property development company based in Guangdong, China. It is one of the largest property developers in China. When compared to Evergrande, Country Garden is significantly larger. Evergrande has about 800 projects across China whereas Country Garden has over 3,100 projects. Country Garden, since 2007, has been listed on the Hong Kong Stock Exchange.
While Evergrande has filed for bankruptcy in New York and is facing severe cash flow problems, Country Garden, which has almost 4 times the number of projects only has liabilities that are 59% of Evergrande. That is not to say that all is rosy at Country Garden as China’s property market undergoes a deep correction.
While we are not totally sure whether the fortunes of the Chinese property downturn will affect Risland (Thailand), we believe that it would serve buyers to know that Risland is a wholly-owned subsidiary of Country Garden.
So how can buyers protect themselves from uncertainty?
If you are a risk-averse buyer, perhaps this may not be the push you need to commit to your purchase regarding a project by Risland. Our take is to perhaps purchase the completed unit or if the development is under construction, to scrutinise the purchase documents carefully especially those pertaining to the land on which the development is sitting on. Is it mortgaged, are there other encumbrances? Always look for an experienced agent who can advise you accordingly. Every investment comes with a certain element of risk. However, as an investor, you need to be aware of all the risks associated before committing to the investment.
Yours sincerely,
The team at investbangkokproperty.com
