The recent political upheaval was a vital wake-up call for the local property market.

The basic question many builders sometimes forgot to ask over the past four years during a time of buying frenzy, has come home to roost. Essentially it has to do with a fundamental query: Who are the developers building for?

With prices having tripled or quadrupled since 2000 for residential units in prime areas, a correction seems due, triggered by the recent civil strife.

New figures released by the Thai Condominium Association last week found sales in the first quarter fell 70 per cent short of forecasts.

Developers had expected a 15 per cent rise in sales but only obtained 5 per cent. The results for the rest of the year now appear more downbeat than during the start of the year.

Such a retreat has stung even the more careful and conservative player.

The next question deals with what developers intend to do to ensure the situation doesn't snowball. Can they engineer a soft landing?

To begin with, the property bubble today has ballooned to a point where it poses a serious challenge to builders, banks and related outfits.

The glut of condominiums on Sukhumvit, for instance, should be a source of concern for the market although better built and managed sites should ride out the storm with less difficulty.

Supalai Public Company's deputy managing director Atip Bijanond had remarked that the property bubble is always more precariously perched on the condominium front, rather than the detached-housing market.

"Experienced professionals know at least one-third of condominium buyers are buying for investment, not as end-users," he said. "This segment intends to rent out or sell their units once they lock in profits."

"But should prices fall, they will want to get out, making downturns more severe than on the detached-home front, where most of the buyers are end-users," he noted.

Current buying in the market reflects much of Atip's observations.

One foreign buyer of a condominium in a beach town said he intends to "flip" the unit once prices start surging. He has no intention of keeping it. But his decision was made before the political conflict became so embittered.

It will take many more months, perhaps even a year or so, before pressures become so unbearable that a sell-off ensues.

But moves to liberalise foreign ownership are unlikely to materialise soon. Grande Asset CEO Pongphan Sampawakoop earlier this year said he would like to see the government move to change the law to allow foreigners to own more than 49 per cent of a condominium building.

The developer believed such an adjustment could benefit the market as the expensive units in prime areas were beyond the means of most locals.

But hopes of that happening are dashed with the xenophobia marking the present upheaval.

There is a growing global awareness that the Thai economy and social order is far from being the mature one analysts painted it to be in the past.

More foreigners are reassessing the risks. That spells trouble for developers as investors review the anti-Singapore rhetoric and abuse that had been hurled by angry mobs.

A recent gallant move by the Foreign Ministry to allay fears of the foreign community deserves credit. But its attempt to "close the gate after the horse had bolted" won't repair all the damages, said one developer.

Singaporean buyers of local properties had been a key factor keeping prices afloat.

Prior to the troubles, many Singaporeans were planning to retire here as they thought Thailand offered quality living, as well as a safe place to park their cash and buy a second home.

Such perceptions are now, at best, being politely reconsidered. The large number of cancellations by regional travellers is also alarming.

These are the new realities developers have to address if they are to move forward.

Itthi C Tan

The Nation