The military coup that took place in Thailand on May 22 is expected to have a negative impact on the country’s investment sentiment, although based on past situations any disruption to the real esate sector could be short-lived or limited.
Suphin Mechuchep, Managing Director of international property services firm, JLL, said the impact on the real estate industry has remained minimal as the coup was no surprise to many local and foreign property investors.
She said: “Our discussions with clients and business partners, including property developers, investors and corporate occupiers, showed that the coup came by no surprise. Many of them had not expected negotiations between pro- and anti-government parties facilitated by the army to settle the country’s political crisis.
“In addition, most of the existing property players in Thailand have appeared immune to the current political situation. They have experienced many disruptions that the country has been through in the past, whether they be previous coups, political violence and natural disasters. Experience showed that most of these disruptions had either short-lived or limited direct impact on the real estate sector.”
“In fact, experience also showed that economic crises were more harmful to real estate. Capital and rental values in some property sectors in Thailand fell during the both the Asian Financial Crisis and the Global Financial Crisis, but over the past seven months of pre-coup anti-government protests, capital and rental values in most property sectors have continued to grow.”
She added that the coup may scare off property investors who are new to Thailand, and noted that new investors are less willing to enter the Thai market anyway due to political turmoil that the country has endured.
“Similarly, since the political tension escalated in late 2013, we have already seen property developers, owners, investors and occupiers becoming more cautious, with some of them adopting a wait-and-see approach. There remains no clear evidence of the coup changing the situation at this stage.
“Having said that, it remains too early to tell if the military intervention could provide a solution to the country’s political deadlock and help reduce political uncertainty, or would have negative or positive impact on the overall economy and the real estate sector in the later phase.
“It is expected that an interim government will be formed shortly. If the resistance is limited and the interim government is capable, we would then see some hope,” she concluded.
Picture caption: Events from Thailand dominated news headlines and newspaper front pages around the world last week.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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If you have a news story or comment for publication about Thailand property or real estate email andrew@propertyguru.com.sg