The Constitution Court of Thailand’s decision to scrap the 2 trillion baht (US$62 billion) borrowing bill has pushed prices of land along the prospective rail lines down. Following the ruling to scrap the planned 2-trillion-baht infrastructure loan bill because the contents in the draft violate the constitution, Thai Real Estate Association president Pornnarit Chuanchaiyasit said the decision disappointed short-term investors as they would fail to cash in on previously projected land values up at double or triple their purchase price.
According to Mr Pornnarit, the court ruling indicates that investments will shift into the capital and adjacent areas, especially those along the urban rail lines, with test runs scheduled in 2016-2017.
The government’s plan to develop a high speed rail network has been put on the backburner following the ruling to scrap the planned 2-trillion-baht infrastructure loan bill. . (Photo of Chinese high speed train by Bvehk via Wikimedia Commons)
Thai Condominium Association president Thamrong Panyasakulwong said the estimated land value in the provinces may contract by 50 per cent, making it harder to sell off all the condos in other provinces. Land development activities will be suspended until clearer directions are seen. It is also a chance for buyers to purchase outlying condominiums at cheaper prices, while labour and construction material markets will benefit as well from the ruling.
Housing Business Association president Atip Bijanonda, meanwhile, viewed that land speculators will be most negatively affected because they expected to cash in from skyrocketing land prices along the high-speed rail lines, especially in the northeastern provinces of Udon Thani, Khon Kaen and Nakhon Ratchasima. Business operators, however, will not be greatly affected as they did not make any rush purchases of land as they viewed the government’s plan to be unclear.
The Chiang Mai Land Department will assign officials to re-asses property values now that the bill to bring high speed rail lines to Chiang Mai has been deemed unconstitutional. (Photo from Wikimedia Commons)
Real estate prices in early 2014 were affected by the political stalemate but sales began to improve in February and return to normal in March. Atip viewed that the Monetary Policy Committee decision to cut the policy interest rate to 2 per cent would slightly boost domestic consumption because of the ongoing political turmoil.
Department of Lands’ deputy director general Pramote Yamalee said he would assign officials to estimate land prices in Chiang Mai province following the demise of the loan bill. Land development companies have not been much affected as they did not make huge investments as the bill was unclear.
Land values along proposed high-speed rail lines are now expected to decline after speculators initially sent prices skyrocketing.
Property transactions during the past two months dropped as a result of political unrest. It should return to normal however if the political situation becomes stable in the second and third quarter, said Pramote. Transactions in 2012 accounted for more than Bt70 billion.