How much it's hurt will depend on how quickly political situation is resolved
[SINGAPORE] With Thai developers already cutting back on marketing and promotional campaigns in the light of investors taking a wait-and-see approach, the extent to which Bangkok's property market is hurt by the current round of protests will depend on how quickly the political situation is resolved.
Already, both listed and non-listed developers have announced that they would reduce the number of new project launches in Bangkok in the coming year while waiting for a clearer picture on the political situation, said Surachet Kong-cheep, associate director of research at Colliers International Thailand.
"For instance, Pruksa Real Estate has announced that they have plans to launch about 50 projects in 2014 compared to approximately 70 projects each in 2012 and 2013," said Mr Kongcheep. "AP Thai is planing to launch some 20 projects in 2014, as opposed to 30 projects in 2013."
"Though experience from previous bouts of political unrest that Thailand has experienced over the last decade suggests that short-term impacts from individual incidents of unrest on the property market have been limited, there has been longer-term uncertainty created by these events, as is evidenced by the fact that growth in Thailand's foreign direct investment has not kept pace with its Asean neighbours in recent years," she noted.
Indeed, investors - both foreign and local - have taken a step back in the light of the latest round of political unrest.
Said Colliers' Mr Kongcheep: "It should be noted that Thais are currently putting their money on hold due to the lack of confidence in the political situation."
Aliwassa Pathnadabutr, managing director of CBRE Thailand, too has felt the bite.
"As the protests have dragged on, we are starting to see the impact on foreign investors in the Bangkok market," she said. "We manage about 15 projects in Bangkok, and we see less foreign investors walk in; there were no sales to foreigners during this period."
She added: "We still have walk-in Thai customers, just that (if they are buying the property for investment) they are delaying their purchases. End-users are still buying."
While some of the slowdown is undoubtedly due to the political instability in the country, marketing agents are quick to point out that this is generally a quiet period due to the holiday season. Indeed, developers usually wait until after Chinese New Year to launch new projects.
Eddy Lau, key executive officer of Century 21 (Exon Property), is optimistic that things will pick up after Chinese New Year. He is negotiating with developers to bring two projects which are located closer to the CBD area into Singapore.
Michael Bok, group director for Trillion Property agreed, adding that the falling Thai baht has prompted some clients to accelerate payment transfers in order to take advantage of the exchange rate.
"We didn't do any major selling at the end of last year. But on an ad hoc basis, I still see quite a fair bit of purchasing for TC Green, 15 Sukhumvit Residences, and Tidy Deluxe," said Mr Bok.
"In November, we travelled to Malaysia; Malaysians are very receptive to Bangkok property," he added. "Even now, with news of the unrest, they are still signing contracts and making payment. On average, (we have sold) 10 to 15 units for each project within this period."
In the meantime, the falling Thai baht provides overseas investors a good opportunity to buy prime property cheaper.
"If prices are affordable and in good locations near the BTS station then chances are, buyers will still be keen. If the baht falls then buyers will be more keen as prices will look attractive and cheaper by many folds compared to Singapore," said Doris Tan, head of international residential projects at JLL.
Overseas investors looking for a long-term investment can't go very wrong with residential projects in prime locations, said Ms Pathnadabutr.
"Prices in Bangkok continue to increase because land and construction costs continue to increase. In the mid-market sector - defined as below five million baht - affordability of people is low. But in the luxury and super-luxury sectors, we believe prices will continue to increase."
With thousands of anti-government protesters planning to occupy the streets of Bangkok today, leading up to elections scheduled for February, only time will tell.