Flood Has No Long-Term Effect On Property Market In Thailand
The floods recently experienced in Thailand have vastly affected the property market, with a varying degree of impact in the different sectors. Here is a breakdown of the effects and recovery strategies for each sector in the market:
In the short-term, the sales in the residential market will slow down while the city is affected by the floods. In the mid to long-term, the impact on various levels, such as products, location and pricing, buyers will likely pay more attention to flood protection measures and design features while shopping for property. The cost of projects is also likely to be affected, due to rising cost of construction materials and skilled labor. The slowdown in purchasing power among buyers, due to loss of income or additional expenses from repairs is going to be redirected towards lower-priced products. At the higher end of the market, the demand for second homes is going to rise, especially for city and resort condos. As a result, resort markets like Pattaya, Phuket and Hua Hin will benefit from this scenario. The overall market could see a shift in trend towards condominiums, over houses especially among young buyers. This is because buyers feel that their property will be safer from floods.
Hotel and Apartment Rental Market
This side of the property market has seen a lot of increase in activity, due to demand from those people whose houses have been flooded and foreigners who have been contracted locally to repair factories and damaged product lines. In the short term, this part of the property market is likely to remain intact, due to 1 year leases, but after that a long-term effect could be felt, due to reduced foreign investor confidence. The Thai hospitality market will also feel the impact, but likely rebound afterwards.
Demand for office space remains strong, but concerns over the global economic crisis still loom over the market, with the likelihood of many companies opting for smaller space.
Several industrial factories have been affected by the floods, but in a show of support the Thai government has chosen to provide several supporting measures to bring companies back into operation.