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NEWS UPDATES Asean Affairs     26 October  2011

Property losses in Thai flooding

The initial losses of property developers from the floods are estimated at 18 billion baht (US$600 million), but the industry's stability as well as that of the financial institutions that support it should remain intact barring a catastrophic flood in Bangkok, says a consultant.

Sopon Pornchokchai, president of Agency for Real Estate Affairs (AREA), said inundated land contained 311 projects, either partially completed or planned, represented 34,203 unsold units with a value of 98 billion baht..

Assuming 20 percent of sold units are returned due to flooding, those losses are estimated to total 53.1 billion baht. Combined with the 174.5 billion in value of unsold units, the possible opportunity loss equals as much as 227.6 billion.

"If floods delay income for six months, at an interest rate of 0.5% a month that is 6.71 billion baht," he said. "If development costs in the flooded areas rise by 5%, this is another 11.26 billon baht in losses."

Developers could face 17.97 billion baht in losses, although this is only an estimate and it could worsen.

However, the industry should be able to withstand these losses as long as utilities in the inner city are not affected by floods.

If inner Bangkok is flooded, all businesses will be temporarily closed and the economy will be crippled. "Property businesses will nosedive due to lack of purchasing power," said Mr. Sopon said.


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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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