Does the current economic crisis spell cheaper rentals in Bangkok, Thailand?

With what is happening in the world economically, we get a lot of enquiries from people expecting that rental rates here in Thailand will drop/have dropped and that it's now possible to live in a 500 square meter detached house with private pool for 50,000THB per month.

Well, the truth of the matter is that the rental market has not been affected in a very large way at all in Bangkok yet, and I'm not sure that it will be affected at all. 'How is that possible?' I hear you cry, and here I give my explanation.

Firstly, one needs to remember that the majority of rental properties, especially the condominiums are owned by local thais and have been bought as an investment property. The vast majority of Thais buy their properties, either investment or for residential purposes in cash, not using bank credit facilities such as a mortgage. Indeed, since the economic crisis of 1997, Thai banks have in general been very over cautious when it comes to granting loans and home loans have been very difficult to obtain. For a foreigner wanting to buy property in Thailand, while there are avenues to facilitate this, the fact is that is very difficult, and the interest rates are not too attractive. What all this means is that property owners in Bangkok don't 'need' a tenant in their property as much as , say a property owner in the U.K. who has a mortgage payment to furnish. Thai landlords tend to be more willing to let a property stay empty than to let someone insult them with a low ball offer. Of course, there are exceptions to this rule, and the longer a property is vacant, the more willing to negotiate most owners become, which brings me nicely onto ......

The property sales market is suffering here in Thailand, the same as everywhere, though certainly not to the same extent. The government's actions reducing the property transfer fee and special business tax has had a good effect, and combined with the fact mentioned above, that this is not a credit market, but more of a cash market, I don't foresee property prices falling a great deal in Thailand. You have to remember here that when people are not buying, they still need a roof over their head and this is the time when they rent and wait it out to see what happens next. This means that occupancy rates, especially in the Sukhumvit and Silom areas stands at around 88%. This figure varies slightly from quarter to quarter but in general, high quality apartments that are reasonably prices at market rent, continue to enjoy 100% occupancy, for most parts of the year. With occupancy rates so high, it is no wonder that prices aren't as flexible as one would predict given the global financial conditions.

Finally, even considering the political turmoil which has gripped the country in the last few months, including the ridiculous closure of the main international airport, the number of foreigners coming to Bangkok hasn't seen the huge reduction that was predicted.