Political crisis to lop off Bt589 bn property value

Economy February 21, 2014 00:00

By Pichaya Changsorn
The Nation

The ongoing political crisis may slash the value of Bangkok's property market by half a trillion baht or about 5 per cent of the total, but the impact will be temporary, said Sopon Pornchokchai, a property appraisal expert.

Property assets in Bangkok and its vicinity are estimated to be worth Bt8.95 trillion and assuming the ongoing political turmoil adds an additional 0.5-per-cent risk to the 7.1 per cent rate given by New York University, the damage could reach Bt589 billion, Sopon, the managing director of Agency for Real Estate Affairs, said yesterday.
“Nevertheless, the reduction of the [appraised] property value as such is temporary. When peace returns, the prices will go up,” he said.
 Sopon cited major international catastrophes such as the September 11, 2001 attacks in New York, the riots in Paris where thousands of cars were torched, as well as the Thailand’s experience in the past as evidence of the resilience of property markets.
 “Even when CentralWorld was set on fire, it did not bring down the prices of properties. Don’t be afraid,” he said. 
“And neither have rental fees declined, as they are bound by contracts. The rents could come down if the current conflict prolongs for many years, but that is only in a very pessimistic scenario.
There have been a few cases in history when civil wars and major political upheavals have pulled back the progress of cities such as Phnom Penh, once dubbed the “Paris of the East”, or Ho Chi Minh City and Yangon, which were not inferior to Bangkok in the past, said Sopon.
“Hence, these Thai “super powers” should find ways to end their political battles as soon as possible so that Bangkok does not suffer the same fate,” he said.
The property expert was speaking at a press conference held to announce the seminar “You have the land, we have the ways”, scheduled to be jointly organised with One Click, a shopping mall consulting firm, on April 1.