Increased political uncertainty will have a negative impact on investment sentiment in Thailand’s real estate market as it has dampened investor confidence, according to international international property services and consultancy firm JLL.
The company said the Constitutional Court’s disqualification of caretaker prime minister Yingluck Shinawatra on Wednesday had heightened the political uncertainty.
The judgement has not resolved the political crisis and has sparked fears of new violence by the government’s supporters.
Suphin Mechuchep, managing director of JLL, said the situation is expected to lower demand in various property sectors in the short term such as lower demand for Bangkok hotels and a softer market for the residential and retail sectors.
She said the Bangkok office market is likely to feel the least impact as tenants are locked into multi-year lease agreements. There has been no clear sign of companies with offices in Bangkok downsizing or shutting down operations, but growth in demand from new business set-ups will continue to slow.
“However, we do not expect the current political crisis to lead a property market collapse. The political turmoil has hurt the country’s macro economy, but generally most property developers and owners remain financially strong and thus a situation where property owners will be forced to sell their property assets at discounted prices in the near future is unlikely.
“A long-term outlook for the Bangkok real estate market remains hard to forecast as it will depend on how the political crisis will progress and be resolved,” said Ms Suphin.