“Cross Country Experiences” THAILAND

Ballobh KritayanavajSenior Vice PresidentG H Bank – Thailand

11 April, 2013

Housing : An Engine for Inclusive Growth

Population and GDP : Thailand and South Asia Countries

source : IMF, World Economic Outlook Database, October 2012

Country

Population GDP Size GDP per capita GDP Growth

MillionsU.S. dollars

Billions U.S. dollars %

2013E 2013E 2013E 2012E 2013E

India 1,239 2,117 1,709 4.9 6.0

Pakistan 183 237 1,296 3.7 3.3

Bangladesh 152 127 835 6.1 6.1

Thailand 65 413 6,364 6.4* 5.0*

Afghanistan 33 22 668 5.2 6.5

Sri Lanka 21 65 3,104 6.8 6.7

1

GDP Growth and Housing Completions

in Bangkok and Metropolitan Region

2

Housing Ladders Prices of New Houses Offered for Sales in BMR Market 2012

by Private Housing Developers

3

EFFICIENT PRIVATE HOUSING DEVELOPERS

Data : REIC Graphic : GH Bank

4

NHA’s Subsidized Low- Cost Housing Completions 2004 2( –012

Avg # 30,000 units/year

5

Home Loan Outstanding in Thailand

6

Market Share of Home Loans Outstanding

Residential Mortgages in the Thai EconomyResidential Mortgages in the Thai Economy

Items 1990 2000 2010 2011 2012

Residential Mortgage

Outstanding (billion baht)138 689 1873 2029 2259

All Types of Loans(AL) 1979 4309 11802 12951 15346

GDP at current price 2184 4917 10104 10460 11363

RM : AL (%) 7 16 16 16 15

RM : GDP (%) 6 14 18 20 20

Source : Bank of Thailand

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Copyright -BallobhKritayanavaj

EFFICIENT HOUSING AND HOUSING FINANCE MARKET EFFICIENT HOUSING AND HOUSING FINANCE MARKET --THAILANDTHAILAND

FINANCIAL INSTITUTIONSFINANCIAL INSTITUTIONS

DEVELOPERS HOUSES

Infrastructure Development AuthoritiesInfrastructure Development Authorities

PolicyPolicy, , Planning and Control AuthoritiesPlanning and Control Authorities

• Developer loan (land and construction)

2. PRODUCTION PROCESS 3. MARKETING & SALES PROCESS

4. INDIVIDUAL MORTGAGE LENDING PROCESS

5. TRANSFER PROCESS* Land registration and Title transfer* Mortgage registration* Transaction taxation

6. HOUSING MANAGEMENT PROCESS

7. RESALE PROCESS

SITUATIONS •Population (rural –urban) * Social & cultural * Economic * Political & legal * Technology* Financial market

PRODUCTION INPUTS• Land - Construction materials* Labour- Contractor - Professionals* Capital - Information

•Government Housing Bank*Commercial banks* Government Savings Bank* Finance companies

* Savings –downpayment* Loan amount * Interest rates* Loan term (repayment period) * Lending conditions* Valuation – credit analysis* Payment collection * Foreclosure

• Residents * Developers* Community organization

*Location analysis *Land acquisition * Project planning & design * Infrastructure construction*Building construction

* Public sector* Private sector- Housing developer- Home builder-Self-Built

* Informal sector-Slum/ Squatter

* Price - Project size and units* Location* House type (SH –TH –CD)* House quality* Infrastructure quality * Community service and environment

* By Developer * By RE Agent - Realtor - Broker

•Owner -occupant * Investment for rent* Speculator for profit

* BMA/ Municipality* Electricity Authorities * Water Works Authorities* Telephone Services Authorities* Department of Public Works and Town&Country Planning* MRTA * BTS * Highway Authorities

• Housing policy and strategy (Government - NESDB –NHPC) * Financial policy(BOT –MOF)

* Urban planning and zoning(Dept. of Public Works and Town&Country Planning)

* Land subdivision control (Dept of Lands / BMA Dept of City Planning / Municipality etc

* Building construction control * Environment control * Consumer protection

•GOVERNMENT POLICY* LAWS* REGULATIONS

•SUPERVISION

* For sale by owner* Agent /Realtor/ Broker

BUYERS

11. . PROJECT LENDING PROCESSPROJECT LENDING PROCESS

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Key Elements for Efficient Housing Sector

Economic growth (Sustainable – no bubble)

- Job creation and employment stability

Housing provision for all Income levels (inclusive, new home & resale,

housing ladders, public & private, rental & ownership)

National housing policy - Homeownership strategies

Legislation & regulations (Urban Planning/Zoning, land subdivision control,

building control, condominium laws, environmental control, consumer protection etc.)

Land and infrastructure development (available - accessible)

Housing finance (available - accessible – affordable )

- Low Interest rates – high LTV - long term up to 30 years)

9

Land & property registration and transfer system (accurate and fast)

Fiscal policy (Taxation, subsidy - supportive)

Investment promotion for housing developer (privilege through BOI)

Labour and building materials (available – good quality)

Construction technology (appropriate - innovative)

Education + Training & counseling programs

Statistical data & Information (Real Estate Information Center)

Housing professional development (associations – developers –home builders

financiers - valuers – brokers - sellers – property managers)

10 Key Elements for Efficient Housing Sector

INTEGRATED HOUSING AND HOUSING FINANCE MARKET (THAILAND)INTEGRATED HOUSING AND HOUSING FINANCE MARKET (THAILAND)

Ministry of FinanceMinistry of FinanceMinistry of Social Development & Human Security

Ministry of Social Development & Human SecurityGovt. MinistriesGovt. Ministries Ministry of InteriorMinistry of Interior

Govt. AgenciesGovt. Agencies

Bank of ThailandBank of ThailandLands DepartmentDept. Public Works andTown Planning

Lands DepartmentDept. Public Works andTown Planning

Special Financial Institutions

Special Financial Institutions

National Housing Authority (NHA)Community Organizations Development Institute (CODI)

National Housing Authority (NHA)Community Organizations Development Institute (CODI)(Regulators,

Financiers, Developers, Land registrations, Investment promoter)Private SectorPrivate Sector

Professional AssociationsProfessional Associations

Training & Education

Training & Education

Information & researchInformation & research

ValuersValuers RE BrokersRE Brokers Community/ Property Managers

Community/ Property Managers

Com. Banks Finance CompaniesOther Financial Institutions

Govt Housing BankGovt Savings Bank SMC

UniversitiesUniversities Training CentersTraining Centers

REICREIC GH BankGH Bank Universities Universities Private Medias and Research Co.Private Medias and Research Co.

www.reic.or.th

www.ghbhomecenter.comHousing Journals (Thai) 19 yrsAPHJ (Eng) 6 yrs

Websites

-Websites- Magazines (e.g. Home Buyer Guide etc.) - Radios

Ballobh K. 20 Jan 2012

- Real estate business

- Housing development

Thai Condominium Assoc.Housing Business Assoc.Thai Real Estate Assoc. Thai Home Builders Assoc.

Thai Valuers Assoc.Valuers Assoc. of Thailand

Thai RE Brokers Assoc.

Property Mangt. Assoc.

- TRETS- Associations

Housing Finance Assoc.

Mortgage Lenders

RU-ABAC CU - TU

- Housing developemt- Housing finance - Property Valuation- Brokerage business etc.

Developers and BuildersDevelopers and Builders

BOIBOI

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Govt’s policies to promote the housing sector & economy

• Housing market stimulation policy • Mortgage registration fee - Reducing 1% 0.01% (loan amount)

• Real estate transfer fee 2% 0.01% (appraised value)

• Specific business tax (SBT) 2% 0.01% (transaction price)

• First time homeownership policy - Promoting more affordable housing

GH Bank first home scheme Total project loan amount : Bt 20,000 million 0% interest rate (2- 3 years) LTV up to 100% Loan amount up to 1 million

• Homeownership taxation policy interest from home loan is deductible for income taxation (Bt50,000 Bt100,000)

• Low cost housing development policy - Board of Investment (BOI)

- Condominiums < 1 million

- Land & house < 1.2 million - Income tax exemption for 5-8 years