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Foreign investors in Thailand were rattled last year when the military seized power, but the prospect of elections before the end of 2007 and a return to democratic rule could settle the country’s turbulent political situation, buoy its economy and spur its property market.
According to real estate firms operating in Thailand and other emerging real estate investment markets in Southeast Asia, the prospect of the end of military rule in Thailand should reverse the downturn in investment sparked by the September 2006 coup. In some areas, particularly up-market developments in Bangkok and in resort areas such as Phuket, foreign interest in property has remained high despite the political turmoil.
“The political uncertainty resulting from proposals made by the current Interim Government has given rise to concerns both domestically and overseas on the economy and impacted inbound investment, but the attraction of Thai property remains strong,” real estate firm CB Richard Ellis argued in a recent press release.
The company says it is seeing “an increase in genuine demand and a drop off in the numbers of developments launched due to the political climate” – the upshot of which should be a “sharp increase in prices” when “Thailand returns to a democratic government.”
Longlom Bunnag, the chairman of Jones Lang Lasalle in Thailand, recently concurred with that view, describing the country’s political troubles as “temporary.”
"A dificult situation" for "the short term only"
“A number of factors such as political uncertainty, legislation changes seen as less favorable to foreign investment and the economic slowdown have hurt confidence of both local and foreign investors. However, a common consensus among these investors is that the difficult situation that Thailand is now going through would be for a short term only and the economy as well as the property sector would look up once the general election takes place,” Bunnag was quoted as saying.
Investors in some Bangkok districts and in popular resort areas already experienced double-digit growth in property values prior to the coup and with prices still lower than comparable tropical destinations such as the Caribbean interest is likely to remain strong for sometime.
However, having witnessed Thailand’s pre-coup real estate boom, several neighboring countries are looking to follow suit, attempting to attract foreign first and second-home buyers and real estate investors with new developments and changes to legislation.
“Other countries such as Vietnam and Malaysia are studying the success of Thai resort properties and are themselves starting to bring resort products to the market,” CB Richard Ellis notes.
The company argues that the coastline and islands sprawling between Da Nang on the south-central coast of Vietnam down to Sarawak on the Malaysian part of Borneo could become “the Mediterranean of Asia.”
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