This week, the political demonstrations in Bangkok have escalated, resulting in incidents of violence and the caretaker government’s imposition of a 60-day emergency decree. On the whole, business activities in the capital have diminished, affecting all sectors of the economy. The vice chairman of the Federation of Thai Industries (FTI) expressed concern that the period leading up to the general election on 2 February could see more violence, as Thailand moves closer to “the status of a failed state, which will wipe out economic confidence.”
As reported by the Bangkok Post and The Nation, leading players in the real estate business have expressed a range of opinions on the impact of the ongoing political crisis on the property sector, especially in Bangkok.
Thongma Vijtipongpun, CEO of Pruksa Real Estate, believes that the metro Bangkok property market, worth THB 330 billion in 2013, could face a 2% decline in value this year – the first such drop since the Asian Financial Crisis. Pruksa alone experienced a 15 percent drop in its presales figures between November and December 2103, when situation began to heat up. Fearing prolonged political unrest, the firm has scaled down its new project launches by over 30 percent, compared to that of the previous year.
Similarly, Sansiri has planned only 19 new launches this year, compared to 48 projects in 2013. Land & Houses has also lowered its 2014 growth expectations from 15 percent to only 6 percent in term of presales. These shifts in strategy reflect a cautious, wait-and-see approach, based on lowered consumer confidence as well as the expected delay of mega-projects under the government’s infrastructure programme – a major stimulant of home buying activity.
The Agency for Real Estate Affairs (AREA) forecasts that the value of project launches in Bangkok and its suburbs in 2014 will drop by 30 to 40 percent from last year’s figure.
Some industry incumbents played down the current crisis, citing Thailand’s remarkable resilience in bouncing back from adverse events, including coups, a global financial crisis, domestic political deadlocks and natural disasters.
Managing director of CBRE Thailand, Aliwassa Pathnadabutr, said that, while this latest situation requires caution, CBRE had not seen any negative long-term impact on property values. Ms. Pathnadabutr also stood behind the real estate industry’s solid fundamentals and its good prospects for growth in both the commercial and residential segments. Also, Mr. Vijtipongpun of Pruksa feels that, if the political issues can be resolved soon, the property market could begin recovering as early as next quarter.
