Tuesday, October 4, 2011

Value of Land Decreasing in Thailand’s Deep South Provinces Since Unrest

Sophon Phonchokchai, CEO of Agency for Real Estate Company Limited, revealed that Thai Real Estate Information and Evaluation Center found that the value of residences and agricultural lands in the three southern border provinces has dropped down over 52,178 baht during 2005-2007. It is believed that now the value has been reduced to over 200,000 million baht from the former value 497,777 million baht in 2005.
Impact of Racial Wars
It was found that some of the plantations were sold with a cheap price and old residents, both Muslim and Buddhist escaped the unrest in the three southern border provinces to other localities. This kind of situation can be a way for interested people to do investment and speculate the profit, while general people especially outsiders might not dare to take the risk.
Thus, if there is a fund set up for mortgages from the landlords, the value will double when the situation is relieved. The land's value will increase and gives a good compensation while the landlords will not have to lose their lands. When the situation calms down, the people can move back to their homelands. However, this will take a period of time such as Aceh, Indonesia that took 15 years, Sri Lanka racial war that took 25 years and Indochina Wars that took 35 years etc.
Short-Term Political Conflicts
‘Wars and politics have an effect on real estate especially long-term security. Short-term political conflicts may affect the capital market but have no direct effect on the real estate market, because the real estate changes slowly. For example, the unrest in the country in 2010 caused more than 100 deaths and more than 2,000 injured, but the opening of the new real estate doubled compared to that in 2009 -- 116,791 units in 2010 from 57,604 in 2009.
So, the government must not let the unrest happen for too long but must restore reconciliation and stop the conflict in the country.’
Positive Effect on Provinces
However, in the case of the three southern border provinces there are some places that are still vivid such Betong District and Sungai Golok District which are important border trading zones. In Sungai Golok District there was a construction of the bridge liking with Malaysia. Whereas, Betong District, in which general people have good income and a lot of Malaysian people cross the border for expenditure, still has a good quality of agricultural products especially Para rubber. This is why Betong and some other border areas are still generally vivid. Moreover, the unrest situation has a positive effect on other provinces especially Songkhla's Hat Yai District that is the central of economic in the southern region. There were numerous housing developments of which the residents are partly from the three southern border provinces. It has been found that there have been several housing developments constructed even in Nakhosri Thammarat' Muang District and Surat Thani' Muang District during these past three years, which is the effect of the migration of the people from the areas.

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