Democracy is a wonderful thing, the American people have spoken, the battle is now over and we get on with business. Democrat Joe Biden’s win in the US election is set to have a significant effect upon our property market, according to leading industry figures – with one group as standout winners.
The whole world, including Thailand, has been closely watching the US election. This is because US policy and its economic performance have a material impact on other economies around the world. The fact a result has been announced creates a level of certainty and hence stability. Certainty and stability are two factors that affect consumer confidence and as a result the property market.
The certainty America and the globe now have about the next president in the White House is set to create a flow-on to South East Asia, who often take the lead from the world’s greatest economy. In terms of impact in the Asia Pacific region, Biden’s election victory may reinforce the trend of cross border capital rising within Asia Pacific, as his administration would most likely prove more conciliatory in terms of international relations and be less controversial overall with China.
Southeast Asian governments have generally not been very impressed by the Trump administration’s lack of commitment, to say the least. Especially in Thailand, where the zig-zagging decision-making of the Trump era has led to a long-lasting honeymoon with China. A less volatile US–China relationship will impact the wider Indo-Pacific strategy, and promote a strengthening of US alliances and partnerships in the region.
As global markets digest a change in direction for the US Presidency, Biden’s win will have a stabilizing effect on today’s economic outlook which in turn will encourage confidence amongst potential property buyers. The stock markets will no doubt reflect the same sentiment globally, and hence show moderate growth that will impact the personal wealth of many investors with share portfolios.
Kasikorn Research forecast that Biden victory will lead to robust US economic growth of 3 per cent-plus in 2021. Every 1 percentage point of US growth will translate into Thai economic growth of 0.2 points and we will see a 10-20 per cent surge in Thai exports to the US.
Unlike Hong Kong’s dollar, the Thai baht is not directly pegged to US currency and has remained fairly stable over the last several months. This means real estate prices in the country will be more attractive to international investors than it was pre-US election.
Thailand has always had a great trade relationship with the US and that will continue but the real issue for our market is the impact of COVID-19. Thailand having successfully dealt with the pandemic while many other countries continue to grapple with its health issues, but with travel curtailed, so too will be the activity on our real estate market created from expats returning and immigration and that is a fair percentage.
However local buyers have come back into the Koh Samui market with great enthusiasm and that will continue now. That sector of the market recognizes the opportunity there for them. It won’t replace the activity that immigration and expats bring but it will greatly cushion it.