The lagging Thai real estate market could present a great opportunity for bargain hunters, says Martin Philips, managing partner of Engel & Volkers (Thailand) Ltd.
While markets in Hong Kong, Singapore and Malaysia have soared, the Thai market remains flat, although industry executives lately have noticed a pickup as people grow more confident of a peaceful return to an elected government.
According to Mr Philips, the Thai market could be poised for a turnaround, which could mean impressive gains for buyers. He points to Singapore, where he saw one property he sold two years ago appreciate by S$1 million.
Singapore's market is supported by foreign investors buying luxury projects that are integrated with resorts.
Although Mr Philips is confident in the Thai property market's long-term potential, he cautions that the strong baht has made Thai property expensive to new foreign buyers, while benefiting earlier investors.
Amid the upbeat projection of the Thai market's long-term potential, he acknowledged that the market, be it Bangkok, Hua Hin or Phuket, is lacklustre at the moment.
''There is no doubt, the market is telling us that political uncertainty is keeping investors on the sidelines. There is also the underlying influence of the potential amendment of the Foreign Business Act, which is not helping.''
Globally, he says, buyers are increasingly gravitating toward condominiums.
''I think that if you're living in the city, you're pretty much forced into a condo situation _ the absence of inner-city space makes it difficult for people to have landed property, so convenience, affordability, facilities and services can all be delivered through condo projects.''
He added that while condos have an edge, a lot depends on the project and unit one chooses.
''Every project has certain characteristics against other projects and it's whatever suits the buyer's needs,'' he said. ''Whether it's because it's closer to the road, the right way to take kids to school or affordability or size or location, there are many factors contributing to a purchase of any property for personal use.''
Similar to other Asian countries, there is demand in Thailand for older units, which offer more space at a lower price.
Mr Philips observed that cities worldwide tend to go through stages in which old neighbourhoods or buildings undergo major renovation and redevelopment, London being a prime example.
''You look at the docklands in London, warehouses were converted and they created lofts _ the space that you can get from some of the properties offers a good opportunity for people with flair to convert these properties.''
Engel & Volkers has put down roots and is expanding in Thailand in order to tap the markets longer-term potential. The company is moving to expand in Bangkok after establishing itself in Phuket and recently opening an office in Hua Hin together with a licensed partner.
Even though the market is slow at the moment, Mr Philips said this was a good opportunity for buyers to position themselves for a turnaround and for real estate agencies to respond.
''We think there is a good opportunity to establish a retail concept here for the sub-markets, so in other words not just one office in Bangkok but upwards of 15 offices in Bangkok,'' he said.
Each office would specialise in a certain district and together they would form a city-wide network.
The key difference of the Engel & Volkers network is that it appeals to the high-end market. Potential partners have to invest in the location, likely 2-3 million baht. They would then have to invest in the staff and obtain a licence costing about 50,000 euros, or 2.25 million baht.
''Royalties stand at 17.5% of the office's gross revenue. And for that they get an established brand and they become a part of the international network.''
As it expands, Engel & Volkers is also trying to stretch its reach and obtain Thai buyers rather than solely foreigners.
The company, which currently has 205 shops worldwide and has sold more than 250 licences, is also opening a booth at Phuket airport. ''It's a serviced booth to provide information to arriving passengers on the Phuket property market and opportunities to meet and greet our own clients who are coming in to view properties as well.''
The next step after Bangkok is not Samui as some might have thought, but Pattaya and Chiang Mai.
''There are some super properties up there (in Chiang Mai) and compared to Phuket they are certainly cheap,'' said Mr Philips.