The declaration of a coup in Thailand is predicted to eventually bring much-needed stability to the kingdom, but anyone expecting property prices to decline will likely be disappointed.
Army Chief General Prayuth Chan-ocha announced on Thursday that the armed forces and police had formed a National Peacekeeping Council to take power. He said the army had to restore order and push through reforms. The announcement came two days after he had declared martial law.
General Prayuth made the announcement in a television broadcast after a seven-partite meeting aimed at finding a solution to six months of anti-government protests, had failed. He said the takeover would not affect international relations.
Sentiments in the property and real estate sector were largely positive after Tuesday’s implementation of Martial Law, with many experts predicting little in the way of a long-term impact from the latest moves by the Royal Thai Army.
Underlining the views of many was Dr. Mark Mobius, Executive Chairman of Templeton Emerging Markets Group and a long-term investor in Thailand stocks. He told Bloomberg: “We view the current military coup as likely overall positive as it creates a more stable environment. The prognosis for Thailand is good given that direct foreign investors want stability in the country.”
Earlier this week a luxury property exhibition at Bangkok’s Central World shopping mall was postponed following the declaration of Martial Law, however two Thailand property exhibitions scheduled to take place in Singapore and Kuala Lumpur this weekend are set to go ahead.
Knight Frank Singapore’s property exhibition featuring Bangkok’s Than Living Sathorn Charoenrat will be showcased at the Hilton Hotel, Thailand Room Level 5, from 11am until 7pm on Saturday and Sunday.
Park 24, a freehold mixed-use development in the heart of Bangkok’s Sukhumvit, is also being showcased in Kuala Lumpur. Real estate agency Trillion Property will be exhibiting the property at One World Hotel, Level 2M, this weekend between 10am and 6pm.
What’s interesting to note for casual observers is that even throughout Thailand’s recent turbulent past, property prices have continued on an upward trend, and that’s bad news for those expecting prices to drop. The 2006 coup barely registered on most market indices, and neither did the street protests and violence of 2010. The Thailand Condominium Index (below), based on data from the Bank of Thailand, shows how prices have continued to rise throughout the past three years despite the ongoing instability.
The reason why is simple. Thai buyers, who account for the vast majority of property buyers in the market, are largely unaffected by coups. There have been no less than 12 coups since 1932. Seasoned market watchers and property investors understand Thailand, and understand this is the way things happen in the kingdom.
What’s likely to have a bigger impact on the property sector than this week’s army intervention is the increasing economic slowdown in the kingdom combined with buyer confidence which now stands at an 8-year low.
Overseas buyers, at least those unfamiliar with Thailand, are the ones who are more likely to react negatively to this week’s developments, but those expecting to pick up bargains will be largely disappointed.