The rest of this year will be an uphill struggle for the realestate business, as political protests effectively dampened the positive sentiments early on this year, Bank of Ayudhya said yesterday.
"Entrepreneurs are bound to remain hesitant about new investments, or will be expanding cautiously due to lingering concerns about the unrest," the bank's research department said.
"Meanwhile, consumers lack enough confidence to spend considerable sums of money or incur longterm debts, which could delay their decisions to buy residences," it said.
Provided that no political vio¬lence erupts again, the realestate market is likely to recover at the end of the year. However, all should be prepared to see intense competition due to the huge surplus of residences.
Last year ended with a supply of 28,000 highrise units and 70,000 lowrise units. This would continue to hamper entrepreneurs' business this year.
New condominium development is expected to concentrate on Ratchadaphisek, Lat Phrao, Thon Buri and Suksawat. Inner zones that could accommodate more projects tend to be along the two electrictrain routes, including Sukhumvit, Pathum Wan and Phaholyothin, tar¬geting uppermarket customers or foreigners.
Prime locations in the outskirts and nearby provinces are along the extension of outbound electrictrain routes - Nonthaburi (Purple Line, Bang SueBang Yai) and Samut Prakan (Green Line, On NutBaring), where condominium proj¬ects are cropping up.
These projects belong mostly to major developers, including Pruksa, Supalai, LPN, Mankong Khehakarn and Tanayong.
In the first quarter, the business showed extraordinary success, thanks to tax incentives. New units rose by 75.8 per cent over the corre¬sponding quarter of 2009, led by Pruksa Real Estate, which launched projects every month and account¬ed for onequarter of new units. About 76.2 per cent of the new proj¬ects launched early on this year focused on medium and lowincome target groups, each paying up to B3 million per unit.
Many mediumsized and small projects hit the market, mostly in locations near key workplaces and areas with communication network access, including the Song Prapha, Ram Intra, outer Sukhumvit, and RangsitNakhon Nayok areas.
With heightened political tension emerging in April, negative psycho¬logical impacts undermined entre¬preneurs' confidence so much that they delayed several project launch¬es. Sales in April dropped 26 per cent on year.