A report released by professional services real estate firm Jones Lang LaSalle stated that Bangkok’s housing market has been hit particularly hard by flooding with many major housing areas across the capital are now under water.
This has resulted in a large number of evacuees fleeing the capital in pursuit of temporary sanctuaries in unaffected locations such as Pattaya, Hua Hin and Phuket.
Meanwhile, real estate investors who initially had their eye on the Bangkok market are now turning to markets outside the capital.
According to the report, house sales in the areas affected by floods have stopped entirely, while sales in areas that have not yet experienced flooding have drastically slowed.
The report speculated that buyers in the Bangkok market have suspended their purchase decisions to wait and see if or how floods will hit the housing project that they are interested in.
Meanwhile, the Bangkok condominium sector has been in a better position due to the general perception that high-rise properties would be less affected by floods.
Nonetheless, sales in condominium projects that are located in the flooded areas have inevitably been affected by the flooding.
Suphin Mechuchep, Managing Director of Jones Lang LaSalle, said, “Some residents in Bangkok who live in the currently flooded areas may consider buying condominiums in low-risk locations as a second home in the future.
“However, we do not expect concerns over future floods will result in a dramatic shift in residential demand from landed houses to high-rise condominiums.
“Although there is a concern [over] whether the flooding that the city is suffering from is an isolated incident, the Thai government is expected to do its best to protect Bangkok and its vicinity from future floods more efficiently,” she explained.
Speaking about the effects of the flood on the hospitality sector, Andrew Langdon, Senior Vice President of Jones Lang LaSalle Hotels, said “Hotels in Bangkok are experiencing a softening in occupancies as international tourists and business travelers postpone travel to the city.
“On the other hand, Bangkok serviced apartments are receiving strong short-term demand from the domestic market and expatriates that have been displaced form homes affected by floods,” he said.
While a number of hotels in Phuket are now offering discounted rates for Bangkok evacuees, the island’s house rental market is not expected to benefit as much as hotels and serviced apartments since most house leases require a six-month to one-year contract.
Villa rentals, however, are performing particularly well now compared with the same period last year.
Kit Fordham, an agent with Direct Rooms, a Phuket-based company specializing in hotel bookings, property sales and rentals, confirmed this latest trend.
“For the past few months, we’ve had an increase in inquiries from Bangkok-based buyers. A lot more Thais have been contacting us about villa rentals in particular, which is out of the ordinary since it’s usually tourists who rent villas,” he said, adding that he believes the flooding is definitely a factor.
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