PHROM PHONG CONDO SELLS OUT IN ONE DAY

       The long-standing business mantra - location, location, location - has again worked its magic for Noble Development Plc,which for the second time this year sold all the units in a new condominium within one day of its launch.
       Noble Refine is located in Sukhumvit Soi 26, just 180 metres from the Phrom Phong BTS station. There is no denying its appeal,what with the Emporium Department Store,Benchasiri Park and Villa supermarket all within walking distance.
       This project, with 234 units, obtained an average price of 105,000 baht a square metre during the late September launch, higher than the 95,000 baht that the 198 units of Noble Reform in Soi Ari in the Phahon Yothin area fetched in March.
       Company president Thongchai Busrapan said that other factors that ensured success included his company's in-depth knowledge of the market plus loyal customers who were willing to make additional investments in the new development.
       "It's true we are willing to spend more on the land plot, but I have to say we don't pay too much - these prices are known in the market. Others buy land at prices close to ours but we choose good plots; when we are confident that the location will work, we buy it,'' he said.
       While some might think that more than 100,000 baht a square metre of condominium space is already very steep and can't get any higher, Mr Thongchai pointed out that prices in Thailand are still cheaper than in some neighbouring countries, while the rental returns are better.
       "I understand that in the UK, Hong Kong and Singapore the rental return is only 3-4%,while here it's still strong at around 5-8%. It depends on the PE [price/earnings] ratio: if the return is good people will invest and the price can rise - there is room for this.''
       Then too, land prices and construction costs are unlikely to drop in the future, which means 100,000 baht a square metre cannot be considered to be expensive.
       Noble is not the only property company doing well.
       Mr Thongchai mentioned that other projects launched recently have also found buyers, with the market having picked up over the past two to three months from the nadir it reached last April.
       Rather than the glimmers of global economic recovery that have become visible recently, it is the low interest rates that have spurred the market.
       "Deposit rates are pretty low and this drives money out of savings accounts into other assets such as property.''
       Another factor propelling the market forward is that a large number of people have come to accept the various problems within the country are nothing new to them anymore because the impact has dragged on for so long.
       That said, Mr Thongchai himself continues to be concerned about the political situation, and has questions about what will happen next.
       "If this government is badly discredited I don't know how long it will stay in power, and if it cannot remain in power there will be new elections. When the prime minister is asked whether he is ready for new elections, he says he is and that he will definitely win,but I'm not sure everyone agrees with him.
       "And if the other side comes back to power what will happen? They would try to bring Thaksin back and that would lead to red, yellow and blue shirts demonstrating again.''
       Looking ahead, Mr Thongchai warned that when the property tax breaks end in March next year the general market would slow down for a spell.
       This does not apply to new condominiums,however, because buyers already know they will not benefit from the incentives when these new buildings are completed in two to three years' time.
       From now until the tax breaks expire in March, everything that is completed should sell well, including single houses and townhouses, because some buyers want to move in right away.
       The tax breaks are substantial, with the special business tax having been cut from 3.3% to 0.11%, transfer fee from 2% to 0.01%and mortgage registration fee from 1% to 0.01%.
       While Noble and other developers would like the government to extend the breaks,Mr Thongchai acknowledges that it might not be necessary to do so because global circumstances have changed since last March,when it was uncertain how this market would be affected by the turbulence overseas.
       As he sees it, the global economy has already passed through the worst point and now it is more about how long-term fund-
       mentals and economic mechanisms will adjust themselves.``Earlier everyone sold goods to America,and although America is not a small country its population is not that large. Yet this population consumed 25% of global production.Other countries such as India and China, which have much greater populations,did not consume more than 10% of what the US did. It's quite strange.
       "So Americans bought a lot of things -we shipped our goods for sale there and got money in return. The money we got was the US dollar and we went and deposited this with [the US] too. With so much money deposited there it pushed their interest rates low, and this in turn led to a real estate bubble that also affected us.
       "But now Americans do not have that much money to buy things from us and this imbalance faces a major adjustment. This adjustment will lead to there being both opportunity and danger in every business.''
       Mr Thongchai added that these changes mean that Asian countries will be exporting less and will counterbalance this by focusing on domestic consumption. Under this strategy, a lot of funds will be invested under various policies, such as infrastructure development. Developing infrastructure directly helps the property market because it opens new locations for development.
       "But all this is long term - we won't see it in the next one or two years.''