Thai Martial Law: Industry reaction
Whilst the full ramifications of the implementation of Martial Law in Thailand yesterday remains unclear, many in the property and real estate sector are welcoming the move towards greater stability that perhaps signals the beginning of the end to the current confrontations.
The order, which was signed by Army Chief General Prayuth Chan-Ocha, cited a 100-year-old law that gives it the authority to intervene during times of crisis. An announcement on the army-run television station Channel 5 said martial law had been invoked from 3am local time on Tuesday "to restore peace and order for people from all sides". The army was keen to stress the move is not a coup.
Simon Landy, Chairman of Colliers International (Thailand), told PropertyGuru: "It's really too early to say what impact the imposition of martial law will have on Thailand's property market. We have to see what follows in terms of government, military and civil action."
However even throughout Thailand's recent turbulent past, property prices have continued on an upward trend, 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. Data from CBRE Thailand (below) focusing on average resale prices perfectly highlights the lack of any impact on the Bangkok condominium market - regardless of Thailand's recent troubles.
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The reason why is simple. Thai buyers, who account for the vast majority of property buyers in the market, are largely unaffected by army interventions and coups. There have been no less than 11 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 than yesterday'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 the kingdom, are the ones who are more likely to react negatively to today's news, but those expecting to pick up bargains will be largely disappointed.
Looking positively, Cees Cuijpers Managing Partner of Chonburi-based Town & Country Property real estate agents, said: "This might be the beginning of the end. The ongoing turmoil has stranded some in a vicious circle with no beginning with no end. The army's leaders [will] try and see to it that stability will be brought back into a proper functioning government."
John Millar, Head of Investor Relations for listed developer Ananda Development was equally positive.
He told PropertyGuru: "Our hope is that the declaration of martial law will lead to a reduction in the potential for violence and accelerate the process of mediation leading to a solution.
"We had already factored in continuing political instability into our business plan for this year, and due to our capital cycle we are acquiring land in the first half and no new launches until the fourth quarter. We see no reason to alter our guidance for the year at this time."
Also upbeat was Kit Fordam, General Manager of Phuket.Net Real Estate.
He told PropertyGuru: "I can only comment on Phuket where we tend to not be so affected by what happens in Bangkok. whether its coups, political demonstrations or even the riots of 2010.
"You could say the events of the past few months are just more bumps on the road to development for the country, and of course there is still some way to go. However, the fundamentals remain strong and I believe the positive trend in the real estate market here will continue in the long run."
In contrast to Landy, Cuijpers thinks shockwaves will be felt in Thailand's property markets, especially in the very short term, and especially in Thailand's capital and tourist destinations.
"Why? Because news makes worldwide headlines and will likely be 'translated' as yet another coup taking place. Why else would the army intervene?" he said.
Landy added that one immediate impact is likely to be renewed negativity in the tourism markets. There's a proven link between tourism numbers and resort property purchases, so any negativity will almost certainly lead to a lack of overseas buyers in Thailand's resort property markets in the medium- and long-term.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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