Weakened domestic demand, slower export growth as well as impact from increasing oil prices and political uncertainty ate up the overall economic growth and resulted in a slowdown in the economy in 2H2000. The economy grew at 2.6% in 3Q2000 from a year earlier, lowering from 6.3% in 2Q2000 and 5.1% in 1Q2000. The restructuring of the real sector including real estate in Thailand is still in the early stages. Despite a reduction in real estate NPL s from Bt295.9 billion as at 1H2000 to Bt129.5 billion as at 2H2000, a large reduction was a result of transferring of NPLs to bank owned AMCs rather the actual restructuring. All these macro factors have dampened market sentiment and been reflected in the pace of the property market over 2H2000.
The overall picture in 2H2000 continued very much as 1H2000. Steady market improvement continued albeit amidst a mild correction in rentals. Polarisation of demand to prime quality properties emphasised the attractiveness of this sub-market whereas price strategy remained an effective impetus to lure demand to some secondary properties.
The market for commercial properties inclusive of the Office and Retail sectors did not show marked improvement over the last six months of 2000. The underlying economic climate and concerns over political outcome made tenants cautious on investing and landlords become more flexible on rentals offered. The sentiment and source of demand were largely unchanged from 1H2000.
Judging from market performance over the past 24 months where sales rates were relatively low, the Condominium sector improved at a very gradual pace. The emergence of the second hand market is threatening the primary market due to cheaper prices. Demand from potential buyers was focused on the resale units, making the sale of the completed units to require at least 2-3 years.
Apartments and Serviced Apartments were largely improved. While serviced apartment