The grim reality of Bangkok’s bloody street battles, which have resulted in scores dying and more than 1,400 injured, has brought both the tourism and residential property markets to a screeching halt.
Knight Frank Chartered managing director Phanom Kanjanathiemthao said that while every segment has been affected by the violence in the heart of the city, tourism is taking the most visible hit.
As any negative impact spreads like lighting, tourism at resorts such as Phuket, Pattaya and Hua Hin has practically disappeared because everybody thinks it is unsafe to travel to Thailand.
“This is because over the past two to three weeks there have been announcements that it might get more violent – not just in Bangkok but across the country, especially in the North and the Northeast,” he said.
Mr Phanom added that many international hotel chains now have an internal policy barring staff from travelling to Thailand regardless of what issue they may have to deal with.
“People operating hotel chains here mentioned this, so if hotel chains won’t let their staff come here there is no need to even talk about tourists.”
Everything seems to have come to a halt in the residential market, with sales either being very low or non-existent in both new and secondary markets.
“People aren’t buying unless it is essential to do so, for example having to move house, but this total is very low,” he said.
“If it is a new product, there isn’t any hurry to buy, so everyone is putting it off. This impact has been felt since the middle of March.”
While some might think this is an opportune time to go bargain-hunting, Mr Phanom said that no one is doing so because it seems everyone is waiting.
“The sellers don’t want to sell cheap, while the buyers don’t know how things will pan out, so bargaining has not occurred.”
Speculators too have all disappeared because they don’t play in this sort of market. Although there are still people looking at developments, again the total number is very low.
It is unfortunate that the residential market has been so hard hit because prior to this, in December, January and February, the outlook was quite good.
“There were positive signs, there were developers mapping out plans to launch new projects, demand was quite good and everybody thought things were positive.
“The situation is worrying because after good economic expansion from the second half of last year to early this year came the protests in March and April that continued into last week. I can see that everything has stopped.”
Mr Phanom said it was not only residential property in Bangkok that has been affected, but also those in resorts such as Hua Hin, Cha-am and Pattaya.
“In the Phuket market, some clients who had looked at some properties have now cancelled. They looked at these homes through our agency, and we were in the process of talking about the details of deals when they said they wanted to wait another three to four months and would return after that.
“They asked us to halt the deal – the seller wants to sell but the buyer is not in a position to take a risk.”
However, the office market is unlikely to be affected in the short term, with occupancy rates likely to remain stationary, and any possible drop being only one or two percentage points.
“There hasn’t been a negative impact on rents from the way the situation has developed, because it had already reached the bottom when the airports were closed in 2008.”
However, the long-term picture depends both on the economy and how the government resolves the current political problems, plus how quickly this is done, because doing so promptly would raise the confidence of investors, especially foreigners, but also Thais themselves, who might want to expand their investment or channel money into new ventures.
“I believe any decision by the business sector will take six months after the protests end.”
Looking ahead to next year, Mr Phanom agreed that if political problems persist then the negative effect would continue, with it being difficult to both sell property and launch new projects. “If the situation deteriorates it would mainly be due to politics and not because of the global economy or global problems. Should the situation worsen, no one would buy.”
Mr Phanom has also not seen companies off-loading their properties mainly because the current flare-up of political violence has only lasted a little over two months, which is a very short period and executives have not reached the point whereby they feel they have to sell.
“But another six to nine months, or one year and you will start seeing more negative signs. In six months’ time they will start looking around, after nine months they will say the situation is not good and in a year’s time they will feel certain it is not good. So the time span leading to forced or cheap sales is nine months to a year.”
Source : bangkokpost.com
