Falling interest rates will always naturally favour the property market. The Bank of Thailand has cut its policy interest rate by 100 basis points so far this year, and local banks have responded by cutting their deposit and lending interest rates twice - between 25 and 50 basis points each time.

In addition, the value of real estate in Thailand is in the opinion of market experts far too low when compared to other countries in the region, and elsewhere.

These factors have indicated to some that a property boom is coming the Kingdom's way in the very near future.

Although many were financially hurt as a result of the Asian economic crisis in 1997, many have since been making money from the tremendous increase in asset values from a decade ago.

Regardless of the prevailing sentiment in the stock market, financial gurus have always recommended that investors allocate a portion of their portfolio to real estate, whether it be a direct property purchase or investment through a property fund.

Aberdeen Asset Management CEO Robert Samuel Penaloza is upgrading his home, convinced that the decline in interest rates makes this the right time to do so.

Bunyong Visatemongkolchai, president of Bangkok Commercial Asset Management, who has been in the property development business for a long time, agrees that the property market is about to take off.

However, he says there is no need for investors to rush. Selecting the right location and having a good financial plan will allow buyers to see the value of their property increase over time.

Years ago, Bunyong spent less than Bt1 million when he bought a house. He recently sold it and pocketed a handsome profit.

Kampol Adsavakulchai, executive vice president of SCB Asset Management's mutual-fund group, warned that while property values generally rise over time, investors should make sure that any real-estate investments they make are liquid - that is, saleable.

Kampol has been a great believer in the potential growth of property investment. Property accounts for about 40 per cent of his investment portfolio, but he is not looking for any more. Before the economic crisis a decade ago, once Kampol earned his first salary, he started thinking about buying a house.

His assumptions included the following: the price of the house would rise over time; his salary would go up every year; and he would receive a bonus every year. He also knew his company provided low-interest loans for employees.

Kampol's first venture into house purchase proved successful, and he paid off his mortgage within five years. He then decided to buy a second house. This also proved a piece of cake, and again it took him only five years to pay off the loan and own the property.

Buoyed by his successful foray into the real-estate scene, he decided to move on to yet bigger things and bought a Bt10-million house in 1997 - and that's where all his assumptions turned sour.

House values dropped, and he didn't get either a raise or a bonus. Worse still, his company did away with its special low-interest loan scheme for employees.

Kampol couldn't sell his property asset, as there was no liquidity in the market. And that, he says, is the biggest lesson he has ever learned about property investment.

He warns that while property prices may rise, investors should always keep in mind whether such assets are actually saleable at those levels.

He cites homes located on Bangkok's Yaowarat Road as an example. The piece of "golden land", where dozens of gold shops are located, is worth Bt500,000-Bt1 million per square wah. But if someone wants to sell a house there, it's not that easy to find a buyer.

Kampol says that while investors should consider property as a key part of their asset allocation, it is imperative to work out an overall investment goal first. Having done that, they should break things down into what financial instruments they need in order to achieve their goal.

Piyarat Setthasiriphaiboon

The Nation