It seems like only yesterday I was writing a similar article during the 2008 financial crisis. It seemed the sky was falling and the world economy seemed to be in freefall. But what we are seeing at the moment during the COVID-19 crisis is a much different animal – and to be fair, not one quite as ferocious as its 2008 predecessor.
2008 saw the world’s financial markets essentially collapse, with government bailouts really only scratching the surface to assist in recovery. It’s sometimes easy to forget how crippling the financial turmoil was over what started as a three-week economic earthquake and spilled into years of recovery.
During that three-week period, Lehman Brothers went bankrupt and financial stalwarts such as AIG, Merrill Lynch, Royal Bank of Scotland as well as the almighty Freddie Mac and Fannie Mae all got to such a cusp of being wiped out that federal governments had to swoop in and save the day, much the exasperation and cost of the taxpayer (to the tune of hundreds of billions of dollars). The socio-economic fallout from this chain of events rocked the world with many people losing their jobs, savings, and for many people, their homes.
I remember being in Hua Hin during the first week of this crisis with my wife and newborn baby and being absolutely terrified of what the long-term ramifications would be. I could only assume at the time that the majority of people would stop travelling to places like Thailand and would almost certainly be holding onto their savings and not be looking to make any major purchase, particularly property. And to be fair, the few months that followed played out just like that – and then all of a sudden, things slowly started going back to normal.
I remember being really taken aback at the time. How could people just carry on as normal?
Where was the fallout that I’d anticipated?
And there is really only one simple answer – Life goes on.
We’re somewhat spoiled here in Thailand in that our foreign visitors and ex-pats generally live in a different economic subset than your Average Joe. We’re comprised of retirees who aren’t dependent on a salary, wealthier than average people who have managed to afford second, third, or even tenth properties, very wealthy Asian visitors, etc. But beyond these ex-pats, visitors, foreigners, there is one group of buyers and players in the real estate market here that will always keep it buoyant during hard times – the Thais.
Anyone who has lived here any length of time, and particularly those who have done business here, can attest to the fact that wealthy Thais are generally VERY wealthy, and at the first sign of financial crisis, they generally turn to property to park their money and leave it far away from volatile investments. This is what I saw in 2008 and this is what I believe we’re seeing here again now. Having spoken with several agents over the last month, sales have by and large picked up quite a bit and it’s local and Bangkok Thai buyers that seem to be propping it up. Also, the Chinese that have been left behind here seem to be sniffing around again. From what I’ve experienced as well as local agent feedback, land and houses seem to be the flavor of the day.
I believe the only thing that’s keeping more sales from happening at the moment is the obvious fact that foreigners (for the most part) still aren’t able to travel into the country. I actually firmly believe that we’ll see an influx of sales once this happens.
As much as we’ve all been complaining, Thailand’s response to the COVID crisis was actually extremely good, and beyond this, the number of cases in Thailand was next to nothing compared to the rest of the world.
If you were of retirement age and living in the UK right now, would you not be looking to somewhere like Thailand to move to and avoid the inevitable second, third or fourth waves? I certainly would.
This is obviously just my humble opinion, but people’s health and safety and quality of life are just about the most important things there are, right?
So are we seeing prices drop right now?
In general, absolutely we are. What else could be expected?
Are some people panic selling?
For sure they are. In any time of crisis, we see this. I’ve seen it happen hereafter every major event that’s happened, and believe me I’ve been privy to a lot here – 9/11, tsunami, bird flu, two coups, SARS, the 2008 financial crisis, and now COVID…and I’m sure I’m forgetting a couple in there. But every single time, the market here has recovered and found a new life and even flourished again. If there’s a positive to come of this, perhaps condo developers will be forced to slow down on launching new projects and allow the market to catch up. However, I can see the demand for houses rising, so I expect to see some new housing projects come online over the next year.
We will recover from this. The markets haven’t crashed as they did in 2008. Sure unemployment numbers around the world seem high right now but I believe it to be temporary. Pattaya sure has taken a beating, there’s no denying that. I don’t mean to seem too bullish writing this article – please bear in mind I’m writing this from a real estate perspective – the local suffering has been immense for both employees now crowding bread-lines, to business owners who have seen their dreams and hard work crushed.
To them, I can only wish them all the best and hope that they can recover over time. But we can’t wallow in our misfortunes, only take stock of what we have and look to better times in the future.
By Stu Sutton
Stu Sutton is managing director of Jomtien Property and has worked exclusively in the Pattaya/Jomtien real estate market for 16 years.