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FEATURE: Buyers scramble for new apartments in Bangkok

Apinun Pongthavornsawas had to rush to beat a crowd of potential buyers hoping to snap up apartments in a new development in downtown Bangkok, near the city's elevated train line.

Tired of battling Bangkok's traffic every day, the 44-year-old engineer decided to spend 3 million baht (US$88,750) on a unit in a development that hasn't even broken ground yet.

His was among the 16,000 apartments sold in the first 10 months of the year, driving a trend that pushed sales up 20 percent over the same period last year, Siam City Securities figures show.

"I almost wasn't able to get this unit, because so many people wanted to buy it," Apinun said.

"The condo is just next to the BTS station and very easy to commute," he said, referring to the capital's elevated rail lines.

"In two years, when the condo is finished, I will give up driving to work and use the SkyTrain instead," he said.

The enormous demand for apartments in Bangkok is powered by frustration with the city's notorious traffic and the much easier commutes offered by the city's three light rail lines.

New lines are already in the works, and developers are changing the city's skyline by throwing up new apartment blocks along all the routes.

Construction on 24,000 apartments was launched between January and August, accounting for more than half of new property projects, according to property consultant Agency for Real Estate Affairs.

The agency's managing director Sopon Pornchokchai said that overall, construction of new homes is down 8 percent over last year, and down 22 percent in terms of value.

"Condominiums are the only segment posting an annualized growth this year to date, reflecting changes in as consumer's lifestyles," Sopon said.

"Meanwhile, the property market overall has declined over the last two years time, due to slumping confidence in politics and the economy," he said.

Thailand's economy has been held back by prolonged political turmoil surrounding the ousting of former prime minister Thaksin Shinawatra in last year's coup and installation of the army-backed government.

Siam City Securities said the kingdom's housing demand plunged to a five-year low in September.

Excluding apartments, units sold dropped by almost 30 percent over the 10 months to October, it said.

"Consumers are worried about their incomes, given the country's poor economic outlook. They're afraid they cannot afford to buy a house, so they are putting off the decision," said a property analyst at Siam City.

Thailand is holding elections on December 23, the first polls since the military coup.

But with no clear frontrunner in the election, experts said the political outlook was still uncertain so the property market could remain in the doldrums next year.

The economy is targeted to grow by 4.3 percent this year, among the lowest rates in Southeast Asia, and 4.6 percent next year, World Bank estimates show.

Khan Prachuabmoh, president of the Government Housing Bank, said political instability, high oil prices and rising inflation were among the negative factors hurting the economy and the property market next year.

"The property market is likely to continue its slowdown next year as oil prices and rising inflation will lower the purchasing power of consumers," he said.

"If the political situation improves and property gets a boost from the next government, the sector could rebound in the latter half of next year."

The rush to build new apartments has also raised fears of an oversupply, especially if the central bank decides to raise interest rates to tame inflation, the Kasikorn Research Center said.

Pimonwan Mahujchariyavong, the center's head of macroeconomics, said that high oil prices and the fallout from the mortgage crisis in the US could also have larger-than-expected effects on the Thai economy.

"If new condominium projects are launched at the same frantic pace, the segment could be flooded with huge supply next year," Pimonwan said.

In a worst case scenario, demand in the market could be badly hit by an economic slowdown," he said.
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