Bangkok's property market could reap long-term benefits should the government give priority to investing in infrastructure projects, says top-ranking official of a Bangkok real estate firm, The Nation reports.
The Nation talked to Pruska Real Estate firm's president and chief executive Thongma Vijitpongpun on how the property market can see an annual growth of 3-7 percent yearly for the next 10 years through building infrastructures. For Thongma, a planned construction of 10 new mass-transit routes which will link the capital and the suburbs could boost Greater Bangkok's real estate market. This along with similar projects as railway double-tracking, high-speed rail and motorways that will string Bangkok together with Laos, Cambodia, Myanmar and Malaysia would rouse markets in the provinces in the coming years.
A public-private working team has recently met headed by Finance Minister Apisak Tantivorawong discussing ways to attract investments to Thailand and how stimulating infrastructure investments can open up opportunities.
Last year's nationwide residential market rose 5 per cent at Bt620 billion compared to 2014, and that figure is made up of Bt330 billion from metropolitan Bangkok with the rest in provinces.
With the new transit routes making it easier to commute to and from the city centre and the suburbs, Bangkok's central business district could begin to decongest as new residential developments would give people more options, says Thongma.
"We forecast that demand will grow by an average of 7 per cent a year in Bangkok and the suburbs from this year through 2025, and during the same period the demand for homes in the provinces will grow by 3-5 per cent. Our estimate is based on our experience after two mass-transit routes - the BTS Skytrain from Mor Chit to Sukhumvit 107 and Mor Chit to Bang Wa and the MRT subway from Hua Lamphong to Bang Sue - were constructed," he said.
There will be demand from both the lower-income and upper-income markets.
Pruksa has reached to Apisak last month through a proposal of residential projects that target the low-income market, Thongma said.
"We proposed that the finance minister consider tax incentives to get the private sector interested in joining with the public sector for such projects. We also noted the problems facing [the real-estate] business, especially the Environmental Impact Assessment process. This delays approvals and is also complicated," he said.
Pruksa conducted a study which showed results that Greater Bangkok's 16-million population is made up of 7 million people who want to move up from renting or staying with their families to owning their own homes. However, only 400,000 of those with a monthly income (Bt25,000) enough to qualify for a mortgage are able to make a purchase annually.
To tap into the low-income market, the real estate firm believes that the government should relax the rules on mortgages for that bracket and see the demand for homes costing no more than Bt600,000 double.
"We are ready to build up to 20,000 such units a year, if the government agrees with the proposal. And it is not only Pruksa that is interested in this project but other property firms as well," he said.