Political unrest dragging Thailand property market down

Political unrest dragging Thailand property market down

Political unrest dragging Thailand property market down

Despite the fact that Thailand is one of the more popular international property markets it seems that political unrest is starting to have a major impact upon new builds, property prices and the take up of existing and new developments. At this moment in time it is the condominium developers who are feeling the pinch although there are serious concerns this could also drive down the residential market in the longer term.

The political unrest in Thailand has led to an array of demonstrations in some of the country’s largest cities and towns which have caught media headlines around the world. This seems to give the impression that political unrest is worsening and, whether or not this is actually the case on the ground, it is the implication which is causing most concern at this moment in time.

Condominium market

Perhaps the strongest reflection of the ongoing concerns within Thailand occurred in the first quarter of 2014 with just 40% of the 10,000 plus new build condominiums taken up. Against this difficult backdrop it f is hard to see why any developers would be overly keen to bring on new stock in the short to medium term. Indeed most will now likely err on the side of caution and delay or postpone planned developments until the market recovers some composure.

Quote from PropertyForum.com : “A lot of foreigners are purchasing Condominium’s, Bungalows and Apartments in and around Pattaya and Bangkok. The concept of a second home in Thailand or a Holiday home is Pattaya has been long prevalent in the country.”

Serviced residences

If we take a look at the Bangkok serviced residences market it shows that occupancy rates in the first quarter of 2014 fell by 7% compared to the previous quarter. There is some debate as to why this drop occurred but many believe it is the array of travel warnings issued by foreign embassies which is curtailing visitor numbers. When you also take into account the historic large number of expats working in the region, and the introduction of these travel warnings, it is difficult to see what might instigate a recovery in the short-term?

Official statistics show there are in excess of 18,000 serviced residences across Bangkok with a further 430 due to be released throughout 2014. Some property experts have also warned of a switch in the expat community with many foreign workers now looking at high end condominiums located in inner Bangkok which offer lower rental rates.

Dependence upon foreign visitors

While there is no doubt that the Thailand real estate sector has been a favourite of international investors over the years, there is also no doubt that the country depends very heavily upon foreign visitors and expat workers. The array of travel warnings issued over the last few months are obviously having an impact upon the local property market and with an improvement in the political arena unlikely in the short term it seems probable that there is further turbulence ahead.

The authorities will need to act to bring the situation under control, they will need to find a balance that suits the majority and ultimately the Thailand property market is heavily dependent upon the outcome of such negotiations. The current situation does nothing for the reputation of the country in the eyes of international real estate investors who now have a choice of recovering property markets to choose from.

One Response to “Political unrest dragging Thailand property market down”

  1. As an update to the article, we have seen things settle down after the coup and Q4 2014 saw a pick-up in sales. There remains a lot of inventory, particularly in the condominium sector, but prices have continued to rise year on year.

    Investment in property in Thailand gives a decent return of 5 to 10% per year plus is an investment that investors can get some pleasure out of! So the popularity continues.


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