Wednesday, April 28, 2010
The Bangkok property market has proved quite resilient in recent years but the ongoing political unrest will hurt foreign sentiment, while local buyers are likely to take events in their stride, according to real estate experts...
‘A lot of buying in Bangkok is for end users, owner occupiers, and people still need a roof over their head and this situation doesn't have any impact on that,' said Robert Collins, managing director of Savills (Thailand).
While foreign property buyers may have been spooked in the short term, Collins expects them to return once the situation normalises.
‘So the long term outlook remains very positive, the fundamentals are very strong. It's obviously too early to tell the immediate impact other than the sentiment of foreign buyers will be hit, but I think it will be a very short term situation,' he explained.
He added that the clashes were very localised incidents and while very serious, they were not as bad as the foreign media portrayed them to be.
So far Savills has not experienced any negative concern from its foreign owners of property in Thailand, mainly because the lead up to the political crisis has been so long. ‘If it was fresh, yes, then we would expect property to be quite severely affected,' he said.
However Savills' management business, which handles a large number of buildings in central Bangkok, is feeling an immediate impact. ‘That is an area where we have had contact from our clients asking us to increase security and making the building as secure as possible in the eventuality that protesters spread into the areas where they haven't moved to yet,' explained Collins.
‘But again it comes back to the fact that apart from the very localised areas where the protests are being held the problem is very contained,' he added.
However, the violent turn of the drawn out political crisis is likely to have a far greater effect on resort markets. ‘For Pattaya, Koh Samui and Phuket the impact will be felt immediately, not only in terms of less new demand for buying resort properties, but also the hotel occupancy will be down and the businesses that service the tourism sector will continue to suffer. So that is the area where it's quite a different story,' he explained.
But it is harder for the real estate market to take strides forward. ‘We should expect the market to continue to remain lacklustre aside from the domestic homeowner housing sector which is performing exceedingly well,' he added.
Where rentals are concerned, Collins pointed out that there are certainly fewer expatriates with large rental budgets moving into Thailand at the moment, mainly because economic growth elsewhere in the region is better. Vietnam and Cambodia are seeing strong economic expansion, while there has been an extraordinary recovery in both Hong Kong and Singapore since late 2008.
‘A lot of senior expatriates in the region are gravitating toward markets where the business is a lot more robust and that has led to a decline in the number of active parties seeking accommodation in Bangkok,' he said.