“2014 was a very interesting year in real estate. The long term rental market was very strong in well located and sensibly priced properties. With regards to property sales, the trend has seen clients moving away from buying off plan condominium units to existing condos, houses and even land. It is also very evident that Bangkok Thais are starting to buy on a large scale in the Pattaya property scene. It looks like 2015 will start of in the same vein which is great news for us old school property guys!! Bring it on…..”
The Thai property market has had a challenging year with a lot of resilience shown, however, there was also a lot of maturity and the market is very well positioned for 2015, especially with the opening of the ASEAN Economic Community. We are also seeing a lot more Thai nationals investing in property and we expect this trend to grow.
Undoubtedly 2014 will be remembered as the year of protests, shutdowns, a coup d’état and an interred military government that delivered Thailand’s 19th constitution since 1932 & shows little sign of passing over the leadership to an elected parliament in the near future.
Whilst speculators outside of Thailand may perceive these upheavals as reason to lose faith in investments within the borders of the kingdom, history tells us a different truth when it comes to property and related industries such as construction. Just as in the past, through political deadlocks, military coups and natural disasters, experienced Thais and seasoned expat observers knew to calmly wait out the initial (and temporary) impact and inconvenience of the upheaval, prepared to act upon the inevitable renewed optimism and drive to continue economic growth that arrived with the stability of the junta government.
At the time of the “Shutdown Bangkok… Restart Thailand” political protests (that commenced at the end of 2013, and did not fully disperse until the coup in May), all markets and business within Thailand were clouded with a sense of apprehension and uncertainty. This sentiment was exacerbated when the Yingluck government requested His Royal Highness King Bhumibol Adulyadej for a dissolution of parliament and new elections, which were ultimately invalidated by Thailand’s Constitutional Court.
The instability continued to undermine the progress of country and general business confidence, including property. All sectors of the property market saw reduced uptake in purchases of new developments, with savvy investors exercising a fair degree of caution whilst they waited out the troubles, although the rental market stayed quite consistent and resilient throughout.
The cautious approach to investment persisted at different levels across various investment markets into the second half of 2014.
The high-end luxury apartment and home market was the least affected by this instability, due to a combination of shrewd development practices catering specifically to this segment of the market, as well as the motivation for purchase by the segment itself, which is often more for long-term investment or as an inheritance investment for their children.[i]
Segments hit harder by the instability were the condominium & serviced apartments sectors, particularly in the more heavily expat-populated centers. First quarter figures cited “…just 40% of the 10,000 plus new build condominiums taken up.”[ii] Popular tourist destinations such as Phuket & Pattaya also saw drops in residential demand, with many foreign buyers putting off purchases of second or holiday homes in these destinations while they waited out the troubles. In May the Colliers International Condominium Q1 2014 Report concluded that “Political instability in Thailand is the major concern of all foreign investors and businessmen”.[iii]
Whilst the period of Martial Law definitely had an effect on Thailand’s tourism market, and most likely on some international confidence in investment in the apparently unstable kingdom, these effects were (as usual) transitory, and the desire for foreign interests (private and commercial) to invest in Thailand seems to be returning once again.
The military junta’s persistence in government actually seems to have achieved a greater state of certainty and confidence amongst both developers and investors, and has played a role in the market closing out the year with, at the least, consistency, and at the most, more than acceptable growth and optimism.
It is clear that now that the political upheaval has been reduced (if not neutralized), both Thai and foreign investors are beginning to re-invigorate the Thailand property markets around the key areas of the country. Continuing infrastructure developments and the addition of new luxury malls all add to the increase in quality of life throughout Thailand and especially in Bangkok and this will continue to push property prices upwards as it has done for the past decade.
Whilst investment in new development is still cautious (and therefore somewhat reduced, particularly in the private sector), there does appear to be a strengthening push towards the sale and re-purchase of existing properties throughout the kingdom, signaling good reason for optimism about the potential of 2015.
[i]“Growth Continues in Bangkok’s Luxury Property Market”June 24th 2014 Thailand-Property.com
[ii]“Political unrest dragging Thailand property market down” by Mark Benson on May 18th 2014 Property Forum
[iii] “Political woes impact Thailand property markets” May 16th 2014 Property Report