KANANA KATHARANGSIPORN
        Despite a contract to build a highspeed train route linking three major airports being signed last Thursday, the residential market in the eastern provinces is expected to remain sluggish next year as shrinking exports from the US-China trade war have dampened housing demand.
        Meesak Chunharuckchot, president of the Chonburi Real Estate Association, said the local market had dropped as the trade war hurt the industrial sector, a key source of demand.
        "An announcement a few days ago by a large auto parts manufacturer that it was cutting working days was not unusual, as this has happened repeatedly in the past six months," he said.
        The situation could escalate next year as the impact from the trade war will be larger, Mr Meesak said at a seminar on the housing market in Chon Buri, Rayong and Chachoengsao held last Friday by the Real Estate Information Center (REIC).
        "There is now sharing of orders across factories to delay possible closures. This will affect purchasing power in Chon Buri as the majority of homebuyers work in the industrial sector, which mainly focuses on export," he said.
        The trade crisis has exacerbated the sluggish economy while the new lending curbs hit housing demand, particularly the lower-end segment, including townhouses priced 2 million baht and lower.
        Mr Meesak said the high-speed train linking three airports will make land prices in Chon Buri, which slowed because of the sluggish economy, soar again. In the past five years, land prices rose by 50% and even triple digits in some locations.
        Increases in land prices will likely exceed homebuyers' purchasing power as well as affordability. Eventually, rental houses or condos will become more popular among locals, he said.
        However, the new Chon Buri city plan, which should be announced soon, could have a positive effect. The plan will allow more development, such as wider areas for red or commercial zones. Condo development will be allowed in orange zones, which earlier did not allow high-rise construction, said Mr Meesak. But condos will only be allowed on roads with a width of 12 metres or more.
        Watthanaphol Pholcheewin, managing director of Chon Buri-based Maneerin Property Co, said housing demand in eastern provinces will be weak as there was a drop in land sales in many industrial estates.
        "Housing demand in Chon Buri and Rayong saw high growth in the past several years as there were a lot of industrial estates established in the provinces," he said. "But it slowed this year after the US-China trade war began."
        The loan-to-value (LTV) limits also affected purchasing power, as visitors to housing projects dropped more than 50% since April.
        Mr Watthanaphol said sales of townhouses, duplexes and single houses in Phan Thong, Si Racha and Bo Win districts declined as customers delayed making decisions after the LTV limits took effect and because of the gloomy economic outlook.

        Property incentives such as cutting property transfer and mortgage fees to 0.01% from 2% and 1%, respectively, should help boost homebuyers' sentiment, he said. These cuts await a ministerial announcement.
        "If the incentives were announced but did not take effect, homebuyers would delay unit transfers, affecting developers' performance or cash flow during the vacuum period," said Mr Watthanaphol.
        He said the Eastern Economic Corridor (EEC) initiatives can help boost residential demand from foreigners, but many of them prefer to buy a house.
        "To help the property market recover, there should be incentives for foreign buyers to own a residential unit in some specific zones and lower interest rates for mortgages," said Mr Watthanaphol.
        Narit Therdsteerasukdi, deputy secretary-general of the Board of Investment, said there will be five potential areas for the housing sector that will be locations near transit-oriented development. They will comprise five high-speed train stations for Chachoengsao, Chon Buri, Si Racha, Pattaya and U-tapao.
        Watchara Pincharoen, president of the Chachoengsao Real Estate Association, said the EEC will drive the province's growth but the industrial estate development plan was opposed by NGOs, shifting government plans to other provinces like Rayong and Chon Buri.
        To help the property market recover, there should be incentives for foreign buyers.
        WATTHANAPHOL PHOLCHEEWIN
        Managing director,
        Maneerin Property Co