The Price Of Property In Thailand Post Floods

The Price Of Property In Thailand Post Floods

Now that we have seen the worst of Thailand's severe flooding, it is time to assess the damage and the affect of the flooding on Thailand's property market. The Thai economy has been temporarily crippled by damage to factories, farms, rice crops, roads and transportation networks. The manufacturing sector has been hit hard, with over 800 factories flooded, leaving thousands of employees out of work. It is expected to take at least another month for the flood waters to completely recede, and it will take several months or even years to rebuild and repair the damage to infrastructure.

The real estate market in other areas of Thailand, such as Pattaya and the Southern Thai beach resorts will likely only benefit

Thailand's resilient tourism industry continues to thrive despite adversity, whether it is a coup, a tsunami, or severe flooding, tourists from all over the world continue to flock to The Land of Smiles, each year seeing more visitors than the years previous. The beach resort destinations of Pattaya, Phuket, Krabi, Phi Phi and Samui are open for business, showing no signs of a decline in visitors due to the floods in Central Thailand. The large numbers of annual visitors will undoubtedly contribute to a steady rise in the price of property in destinations that were not affected by the severe flooding.
 
The Treasury Department recently announced a 20% increase in property valuations nationwide, however these figures were drawn from data going back the past 3 years, without taking into account the recent flooding and the affect of property damage caused by the floods. While potential buyers might be hesitant to purchase property in the heavily affected areas of Bangkok and the surrounding suburbs, the cost of construction materials and skilled labour is expected to rise as much as 50%, with increased demand due to necessary repairs and reconstruction. The higher cost of construction will likely keep the price of property in Bangkok and surrounding areas from dropping significantly in the short term, with an increase in value expected long term.
 
If we look to the past, recent history will teach us that the affect of a natural disaster will only suppress property value for a relatively short period of time. After the 2004 Tsunami struck Phuket, causing extensive damage to beachfront property and claiming the lives of almost 500 tourists and locals, property sales came to a grinding halt. For almost a year the price of residential property and condominiums stayed level, with sales significantly lower than in previous years, however just 7 years on, the average price of residential property on the island of Phuket has increased by nearly 3 times what it was before the Tsunami.

Experts tend to agree that history will indeed repeat itself in the wake of the floods of 2011, as property value in Bangkok and the surrounding areas is expected to stutter just temporarily. Long term projections are still quite positive, and within the next few years the damage caused by floods will be but a distant memory. The real estate market in other areas of Thailand, such as Pattaya and the Southern Thai beach resorts will likely only benefit from the affect of the flooding in Bangkok, as more Bangkokians will be looking to buy second homes in these destinations.