Housing Segmentation in Developing Countries in Transition: A Recent Case Study of Residential Development in Bangkok

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Journal of Real Estate Literature, 6: 2942 (1998) 1998 American Real Estate SocietyM. ATEF SHARKAWYGraduate Programs in Land Development, Texas A&M University, College Station, TX

sharkawy@archone.tamu.eduSARICH CHOTIPANICHPost-Graduate Program in Built Environment, University College, London, England s.chotipanich@ucl.ac.ukThis article utilizes case study research of the residential market in Bangkok to investigate residential development and market segmentation in developing countries with emerging market economies. The article first

considers the process of economic reform and transformation before examining the entrepreneurial, legal, and

institutional environments in Thailand and evaluating the pattern of urban growth in Bangkok. Segmentation

studies are then presented by product type, price level, and spatial distribution before conclusions from the case

study are generalized to developing countries in transition.1. Introduction1.1. Systemic economic transformations in developing countriesMany developing countries are currently in the midst of a momentous change from old

economic systems with interventionist government policies that failed to improve the

welfare of its people. Degree of success in transforming these economies from command

operations to more open systems based on market principles varies. The stage of transition

in each country, the extent of economic base restructuring toward industry, the subsequent

level of development, including residential, and the degree of local market maturation,

including housing markets, all vary as well (Dodsworth et al., 1996).However, developing countries in transition share many characteristic steps in their

attempts at systemic transformation to market economies (Otani and Pham, 1996). Reforms of the institutional framework typically include passage of foreign investment laws,

creation of a treasury and deregulation of the banking sector, gradual price and wage

liberalization, and adoption of property rights and enabling laws (Goldsbrough et al.,

1996).The shift to a market-based economy seeks to achieve improved economic performance, mostly through accelerated industrial output restructuring. Related reform policies

occasionally involve deregulation of industrial prices, devaluation of official exchange

rates, elimination of export subsidies, and liberalization of trade (Chopra et al., 1995).

Policies also involve reform of the state enterprise sector and vitalization of the private

sector, by lifting the constraints of centralized planning, reducing the bureaucracy of

governmental agencies, providing access to credit, introducing nondiscriminatory taxation, and legislating an enforceable framework of commerce and finance codes (Buckley,

1994).Housing Segmentation in Developing Countries in

Transition: A Recent Case Study of Residential

Development in BangkokAbstract30 M. ATEF SHARKAWY AND SARICH CHOTIPANICHOver time the process of transformation requires governmental policies that are characterized by sustainability and consistency. These ensure accelerated growth, increased

employment, and higher incomes. These, in turn, create the foundation for sustainable

housing markets. The free-market mechanism seems to first respond to demand for upperend housing by expatriates and the new entrepreneurs. However, a broader housing market

is not likely to follow until the government implements a sustainable system for housing

finance. Alternatives for such a system abound (Diamond, 1992), including the U.S.

mortgage market model with insured mortgages and secondary markets (Hearth, 1983),

the German contract saving model with its multiloan mortgage package (Von Beyme,

1985), the deposit financing model (Boleat, 1985) successfully used in Thailand, and the

use of pension funds as in Singapore (Lin and Tyabji, 1991). …