A DEVELOPER'S WISH LIST

Thailand's property industry faced serious challenges in 2008, and as the new year approaches it is time to assess the situation and find the most sustainable way forward.

Much like tourists who went from postponing visits during the months of political protest to cancelling their plans altogether after the airport closure, potential property buyers turned from proceeding with caution to delaying or deciding against purchases.

This situation has been compounded by the global economic crisis that has given investors cold feet and created a difficult environment for lending to both individual buyers and developers themselves.

To effectively navigate over this rough landscape heading into 2009, developers need to chart a course for the stable recovery of Thailand's property market.

Investors tend to return to the high end, and this has a major trickle-down effect, providing employment and stability in many other segments of the industry.

This, in turn, provides associated benefits to the population and the economy as a whole.

In my mind there are five key areas that need to be addressed that would benefit Thailand's property industry and set the groundwork for flow-on benefits to the public.

This starts with a desire for political stability and maintaining the rule of law. There simply must be mechanisms in place whereby Thailand's international airports cannot be held ransom.

The airport is the lifeblood of the nation's tourism industry, which provides employment for hundreds of thousands of people.

It is also the main gateway for property investors who bring much-needed and welcome foreign currency.

The government in power must be able to protect all of Thailand's critical interests, including major components of its infrastructure.

A stable government will not only win the confidence of Thai people, but that of its Asean neighbours and other countries around the world.

Improvements in these areas will undoubtedly rekindle investor confidence in all of Thailand's industries.

The next requirement is for a more level playing field for international buyers in the current climate of low conversion rates due to foreign quota limitations.

Increasing the foreign quota would free up more condominium units to meet this demand. This would boost foreign investment capital into the Kingdom, which would in turn assist in spurring the overall economy.

Upping the foreign quota would also attract long-staying, high-yield individuals who contribute billions of baht to the economy through purchases and rental taxes to local governments.

To further build confidence among investors, the leasehold timeframes should also be raised, which would bring Thailand's regulations more in line with global standards.

The third pillar needed for the property industry to step firmly into the future is the practice of self-policing and raising standards.

The industry must put strict regulations into place to ensure developers deliver exactly what they advertise, and to precise specifications. The industry must implement stringent regulations to protect local and foreign buyers by clamping down on fly-by-night real estate developers that lack appropriate funding and rely on off-plan purchases to fund and proceed with a project. These developers create a poor perception in the international market for investments in Thai property.

Now is the time for the real estate industry to stand up and show the world that Thailand is serious about delivering quality property products.

I would also like to see more stability and consistency in construction material costs.

This is probably the wish developers have the least control over, as it is greatly influenced by international market forces.

Over the past year, global oil prices dramatically rose to new highs, only to tumble to four-year lows.

Rising and falling costs are part of the game, but the fluctuations in 2008, due to a multitude of factors, have been much more severe.

This wreaks havoc on construction material costs, and a more stable global oil price would go a long way in ensuring long-term consistency in material prices.

This would pave the way for longer term budget and pricing stability for both developers and buyers.

Finally, I believe that if Thai banks were more open to offering mortgages to foreigners living in Thailand there would be a surge in purchases.

This is critical to compete with other major regional destinations that are targeting the same pool of buyers.

Thai banks need to be open to the idea of making loans to foreigners once they meet a set of appropriate criteria.

Loans to foreigners would not only benefit the main property markets of Bangkok, Hua Hin, Pattaya, Phuket, Koh Samui and Chiang Mai but to other areas of the Kingdom as well.

Let us look forward to the new year positively and proactively and plan for firm and stable foundations that will realise growth and profitability for both the property industry and the Kingdom as a whole.

Nigel Cornick is chief executive officer of Raimon Land Public Co Ltd, Thailand's award-winning luxury property developer with projects in Bangkok, Phuket and Pattaya. For more information visit http://www.raimonland.com.