As the dust settles on Pheu Thai’s landslide victory, the political situation in Thailand has become clearer but the economic situation for the property sector is still ambiguous.
Some things will remain constant – people still need places to live, and the residential market should remain more or less steady, at least among Thai people, said Antony Picon, Associate Director of Colliers Research Thailand. Some foreigners may have found the political turmoil of recent years a bit unsettling, he said, adding that “ it might take a little bit of time for foreigners to come back en masse.” Picon emphasized concerns about stability, and said that many players are taking a wait and see approach over the next months.
Businesses, especially foreign companies, will weigh perceived stability heavily in their decisions about when and where to set up shop. Picon stressed the importance of stability in the long-term, noting “businesses will make a decision based on if they can see three or four years of stability.” As businesses become more confident, developers could see a boom in the office market.
Frank Khan, director of the residential department for international real estate firm Knight Frank, projected the next few months as being very important to demonstrate the stability of the new government, and noted that real estate is always one of the first industries impacted by political unrest. According to Khan, the “Bangkok property market all depends on the political situation,” especially for foreign investors. However, other markets, such as resort area Hua Hin, can find themselves more insulated than the capital in terms of the effects of political unrest. “Last time, Bangkok was burning but Hua Hin was still selling strong,” he said. For resort properties, the coming of the rainy season means a lull in business anyway, and also provides a nice waiting period to see what the policies and stability level of the new government will be.
Beyond stability, the actual policies of the new Pheu Thai government could have large impacts on the property market. Bill Barnett, managing director of C9 Hotelworks in Phuket, held cautious optimism about the new government. Barnett predicted a return to large scale mega-projects similar to those undertaken by Thaksin-led administrations, which in the past have been major boons for property development. As far as the new government’s stance on speculation from outside of Thailand, Barnett said he anticipated a “much more outward looking view on attracting foreign investment.” A projected weakening of the baht could also prove useful in drawing more foreign money.
With the American dollar still reeling, Khan identified regional players Hong Kong and Singapore upping their investment, in addition to increased speculation from the UK, Europe, Russia, and China.
The new government will certainly play a large role in determining the future of the property sector in Thailand. New mega-projects in the pipe-line and potentially increased foreign investment mean there will be enormous potential for growth, but looming concerns over stability continue to give many would-be investors pause. These next 90 or so days will be extremely critical, as the government begins to articulate its policies and the true impact of a Pheu Thai victory becomes clearer. In the more immediate term, possible street protests could be a devastating blow for a nation desperately lacking stability for some time now. As Picon says, “stability is the key.”
Has Thailand finally found a stable government? Will increased mega-projects and foreign investment drive the property market skyward? Or will the bloody scenes of last year repeat themselves, scaring off foreign investment and further harming Thailand’s overseas reputation? Like most investors, all we can do now is wait and see.
Source: Property Report