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Thai real estate hit by strong baht
Real estate news By Asia Property Report
Sep 24, 2007
Not only has the strength of the Thai baht become a major concern for exporters, but it has also had implications for Thailand’s real estate sectors. The rapid increase in the US dollar-Thai baht exchange rate has largely been explained as weakness of the US dollar around the globe, and more recently by continued inflow of foreign capital to Thailand, particularly via the stock market.
Mrs. Suphin Mechuchep, Managing Director of Jones Lang LaSalle Thailand, said “Whilst certain economists encourage the government to reduce interest rates further in effort to curb the baht strength, low interest rates would help property developers burdened with borrowings. They would also benefit the residential sectors as mortgage for home purchases will be less costly for buyers. However, we expect the impact of the strong Baht to be more negative than positive on the real estate sector.”
With domestic consumption, investment and government expenditure slowing during these times of political turmoil, growth of the Thai economy has largely been driven by exports. While conditions for domestic factors are expected to improve if political issues are resolved over the medium term, the near term outlook continues to be weakened by the threat the strong baht poses to the export sector. According to Jones Lang LaSalle, the industrial property sector is likely to be the sector most negatively impacted by the strengthening of the Thai baht.
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