Consumer confidence is likely to pick up in the second half of the year, providing a much-needed stimulus that could push the Thailand property for sale market to grow by 5-10% by the end of year. The government's planned investment in megaprojects, including mass transit, remained on track, with the bidding for the Red and Purple lines to take place in the second quarter, said Thanavath Phonvichai, director of the Center for Economic and Business Forecasting at the University of the Thai Chamber of Commerce.
The centre projected that from the second half to next year, the Thai economy would recover due to pent-up spending, with GDP for the whole year estimated at 4-5%.
''This scenario is possible if the political situation remains stable, with no demonstrations,'' he said.
For the first half of this year, declines in interest rates, likely to be 25-50 basis points, will contribute favourably to the real estate business.
Atip Bijanonda, president of the Thai Condominium Association, said megaprojects would bode well for the property market in the medium term but developers should time their investment plans carefully by taking into consideration megaproject construction periods.
He said the negative factors this year included uncertainty over the government's policy and the lack of confidence among buyers.
Mr Atip expected the construction cost this year to rise at about the same rate as last year, or 7%.
Instead of engaging in a price war, he suggested that developers strive to increase their efficiency by capping costs and adjusting products to meet demand.
Bank of Thailand governor Tarisa Watanagase said the overall economic situation should benefit the real estate business thanks to the downward trends of oil prices and interest rates. However, she warned, the cost of construction materials should be a concern as it hinged on overseas demand, especially that of China.
She said a lot of indicators had been pointing to a slowdown in the real estate business since 2005, with market growth steadily declining from 21% in the first quarter of that year to -6% in the second quarter and -9% in the third quarter.
She defended the central bank's capital controls, saying the measure, along with the amended Foreign Business Act, benefited the country. The capital controls, in particular, had proven effective, as the baht in the offshore market was much stronger than in the domestic market.
''We plan to review the impact of the measure on property funds, which grew 118% last year and continue to show strong growth potential,'' said Ms Tarisa.
However, Kitti Patpongpibul was not so optimistic.
The president of the Housing Finance Association said the real estate sector would continue to shrink since new housing loans dropped to 250 billion baht last year from 273 billion in 2005. The average selling price last year also dipped to 2.59 million baht a unit, compared to 3.08 and 3.73 million baht in 2005 and 2004 respectively.
Meanwhile, Khan Prachuabmoh, the president of the Government Housing Bank, expected the housing market to grow by 5% this year, with 83,000 newly registered units, from 9.6% with a total of 79,000 new registered units last year.
Of the total registered units, 55.1% were single houses, 22% townhouses, and 21.8% condominiums _ a fast-growing segment for which the market share is expected to increase to 32% this year.
The total number of newly launched units this year is projected to decline further by 5% from -1.6% last year.
Thawatchai Suthikijpisarn of Kiatnakin Bank said the number of financed projects this year would remain flat but developers should be more careful about their own capital as financial institutions could lend in smaller amounts.
Mr Thawatchai said last year's shift in demand to lower-priced units had hit developers' margins. Analysts have projected that listed developers will report net profit growth of only 5-10% in 2006, compared to 10-20% in 2005.