While the ongoing political developments in Thailand are expected to have a negative effect on the country’s investment sentiment, the impact on the real estate sector has so far remained minimal, according to Suphin Mechuchep, Managing Director of international property services firm JLL (Thailand).
“Our discussions with clients and business partners, including property developers, investors and corporate occupiers, show that the coup came as no surprise. Many of them had not expected negotiations between pro- and anti-government parties facilitated by the army to settle the country’s political crisis,” said Mrs. Mechuchep.
Suphin Mechuchep, Managing Director of JLL (Thailand).
“In addition,” she continued, “most of the existing property players in Thailand have appeared immune to the current political situation. They have experienced many disruptions that the country has been through in the past, whether they be previous coups, political violence and natural disasters. Experience has shown that most of these disruptions are either short-lived or have limited direct impact on the real estate sector. Economic crises have been far more harmful to real estate. Capital and rental values in some property sectors in Thailand fell during the Asian Financial Crisis (1997-1998) and the Global Financial Crisis (2007-2008), but over the past seven months of pre-coup anti-government protests, capital and rental values in most property sectors have continued to grow.”
Mrs. Mechuchep conceded that the coup may scare off property investors who are new to Thailand but viewed that new investors have been less willing to enter the Thai market anyway, due to political turmoil that the country has endured since late last year.
“Similarly, property developers, owners, investors and occupiers are becoming more cautious, with some of them adopting a wait-and-see approach. There remains no clear evidence of the coup changing the situation at this stage,” added the JLL chief.
Mrs. Mechuchep opined that it was too early to tell if the military intervention could provide a solution to the country’s political deadlock and help reduce political uncertainty, or would have negative or positive impact on the overall economy and the real estate sector down the line.
“It is expected that an interim government will be formed shortly. If the resistance is limited and the interim government is capable, we would then see some hope,” she concluded.