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Published on July 24, 2007

The consultancy expects the currency's appreciation to have a negative effect on the entire property sector.

"Despite high capacity use, manufacturers - particularly those in the export sector - appear unwilling to invest further at this time, due in part to concerns that further appreciation of the currency would damage their competitiveness in global markets," said Subyagorn Sansugtaweesub, head of the company's Industrial Department.

"With a number of existing facilities having reportedly been shut down, manufacturers are actively looking at other locations in the region that offer more competitive resources. Besides the factories themselves, this could negatively affect other industrial real estate, such as warehouses and logistics centres."

In addition to manufacturing, the stronger baht has diminished the attractiveness of Thai residential and resort real estate, the company said.

Many of these properties are targeted at foreigners for either holiday homes or living in Thailand in a second or retirement residence. The more the baht has strengthened, the less these buyers have received for their money.

The same trend applies to real estate from a broader investment perspective. Although Thai properties remain relatively cheap in the Asia-Pacific, prices have risen significantly when quoted in US dollars.