The Governor of the Bank of Thailand (BoT) has issued a warning to Thailand property investors.
Speaking exclusively to English language daily newspaper The Nation, Veerathai Santiprabhob said the Thailand property market: “… does not look as good as it seems to be.”
He was especially concerned about the re-sale property sector.
He said Thailand’s central bank had used electricity consumption data to understand the real estate market much better.
Consumption of electricity in older condominium buildings has been in decline for some time, he said, suggesting many people have moved from old condos to new ones.
He told The Nation this is a warning sign for investors buying Thailand property with the aim of gaining rental returns.
The rental rate is currently flat, he added, while noting that non-performing loans in some sub-sectors are still rising.
With low bank interest rates, many investors have turned to the property sector in search of better returns.
Using electricity consumption to shed light on the property market is part of the bank’s effort to use big data to better understand it, he said.
He also echoed one of our biggest issues with the Thailand property market, and one that is undoubtedly preventing more investors from entering the market.
Traditional real estate research data is not updated, he said, adding that big data can provide real-time information and create new indicators.
Samma Kitsin, a real estate economist, said besides the need for people buying for their own needs, he highlighted two groups buying Thailand property now.
The first group, he said, are investors who are buying off-plan projects with the goal of quickly selling them for a quick profit.
The second group plan to buy residential units for rental yields, he added.
Research conducted by ThailandProperty.News showed a very high level of what appears to be speculative buying.
At one central Bangkok project which was completed within the past three months, more than 60 percent of its units are listed for sale across three of the kingdom’s top property portals.
The project was reported by the developer as being sold out for more than a year.
The Nation reported that many investors are looking for residential units in prime areas of downtown Bangkok where large numbers of expats stay.
From our talks with real estate agents in central Bangkok there is currently far more property for rent than people looking for homes to rent in central Bangkok.
This scenario is not an ideal one for investors in any property market in any city.