Bangkok Post Liakat Dhanji Column.

Byline: Liakat Dhanji

Sep. 5--It has been several months since I wrote my last article. I spent some of that time travelling through Canada and the United States and the observations I made reinforced my views on the Thai property market. Today I will elaborate on one of these views.

Providing the Thai government pursues the correct policies in a timely fashion, the property market will recover to its previous highs or even higher. Let's look at a Canadian example relevant to the local situation.

With the collapse of Olympia and York (the largest property company in the world at the time) during the late 1980s, the entire property market in the province of Ontario collapsed with Toronto the hardest hit. The situation was not unlike that in Bangkok today.

Most finance companies and developers went bankrupt. Consumers lost their life savings, banks stopped lending and property prices went into free-fall. By the early 1990s, values were about 20 percent of their peak levels. The press predicted that prices would never recover to their former highs due to the free-trade agreement that the US and Canada had just signed.

This, they reasoned, would lead to a hollowing out of the manufacturing sector as more industries moved south to take advantage of economies of scale and higher productivity, which would lead to more factory closures and job losses, thereby putting more downward pressure on property prices.

But Ontario elected a new conservative government that slashed the bureaucracy, reduced taxes and introduced a raft of incentives to keep existing industries and attract new ones.