Bangkok is now up for sale to foreign investors as Thai developers cede their collateral, says Thanong Khanthong.

The best view of Bangkok is from atop the Cable Bridge as you drive from the Thonburi side across the Chao Phya River. It is a dramatic panorama of high-rises, a symbol of a modern metropolis about to leap-frog into the 21st century.

Yet seeing is not believing. Most of the condominium projects, office buildings and high-rises are not a manifestation of magical power. Nor are they built by Thai savings. They are largely financed by foreigners, who are now Thailand's creditors to the tune of about US$80 billion ­ almost 50 per cent of Thailand's gross domestic product.

Now the creditors want their money back. However, the Thai developers' pocketbooks have been emptied by the bursting of the economic bubble. Since the developers cannot repay their debts, they have to hand over their collateral in the form of real-estate projects to their creditors. More Thais will have to come to terms with the stark reality that foreigners will own most of Bangkok's concrete jungle.

Banks and finance companies have so far lent Bt800 billion to the real-estate sector, some Bt300 billion of which is believed to have turned sour. This massive amount of money belongs mostly to foreign creditors, who stuffed easy, short-term loans down the developers' throats.

The huge exposure to the property sector is threatening to tear apart the financial system, which is being rocked by the non-performing loans. Now Thailand is facing a financial crisis, sparked by a protracted deterioration in asset quality resulting from high real interest rates and a sharp contraction in economic growth.

In 1984-85, Bangkok could claim only three tall buildings ­ the Chokechai Building on Sukhumvit Road, the Dusit Thani Hotel on Rama IV Road and the Bangkok Bank Building on Silom Road. Then, Thailand was a nice country living within its means.

The Chokechai, Dusit Thani and Bangkok Bank buildings were quickly dwarfed by taller buildings in the following decade as a result of the dramatic economic take-off and the massive inflow of foreign capital. Lax monetary policy in the early 1990s and half-hearted supervision of financial institutions have been blamed as the major factors contributing to the real-estate bubble.

According to Merrill Lynch, bank loans to real-estate developers slowed from a peak of over 20 per cent in 1992-93 to a mere 6 per cent in March 1996. New supply of residential property in Bangkok exceeded annual demand by 17 per cent for four consecutive years.

By 1995, a survey by Government Housing Bank showed an alarming vacancy rate of 41 per cent.

In the office sector, according to Brooke Hillier Parker, a real-estate agent, rents have been falling in each consecutive year since 1991, and prime accommodation is now available at about Bt500 per square metre per month ­ 63 per cent of the level at the market's peak. Meanwhile, prices have not fared much better, having declined since 1992 to current levels of Bt55,000 per square metre, down over 21 per cent from peak levels, the agency said in its March 1997 report.

Thai politicians have moved timely enough to accept this reality. Under a new law, foreigners will be allowed to own 100 per cent of Thai condominium projects. This will help relieve the country's indebtedness. Chatichai Choonhavan, leader of the Chat Pattana Party, has consoled Thais over this seeming breach of sovereignty. ''The foreigners can have the condos, but they cannot ship them in an aircraft back home," he said.

Thai lawyers have been busily hunting for bargain residential projects for their foreign clients, mostly from Singapore and Hong Kong. Real-estate prices in Thailand are now attractive, regionally speaking. But the foreigners would like to wait until the prices really hit rock bottom before stepping in for the kill.

Cash-strapped Thai developers are not in a position to bargain, with tight liquidity and high interest rates strangling them. The Thai government will need to spend up to Bt300 billion to reduce the demand in the oversupplied real estate.

Bangkok is now up for sale to foreign investors.