Categorized | ABPC Advice

The Thai Baht and Property Prices

Posted on 14 December 2014 by ABPC

The value of every currency often determines how attractive any investment is in another country.  Over the last 6 or 7 years we have seen an increase in the strength of the Thai Baht against most other major currencies and this has without doubt seen a slowing down of new money coming into Thailand although the significance of the overall World economy should not be dismissed.

In the early part of 2014 we saw the baht fall significantly in value against most other currencies for the first time in several years.  The current values seem to be far more in line with those predicted by financial analysts who believe that current levels are ‘fair’.  If this is the case as it appears to be, this should give confidence to investors looking to buy property, safe in the knowledge that they are unlikely to experiences losses connected to exchange rate risk.

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The stabilising of the Thai Baht could potential lead to inflation within the property market here in Thailand.  Previously prices had remained relatively constant with sellers tending to make gains on exchange rate differences rather than through returns received from the sale of the property.  Obviously, this only applies to those who are bringing funds from overseas, which of course you need to do if you are buying a property in Foreign Ownership.

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What can we expect in the short, medium and long term?  In the short term I think that everyone is expecting the baht to be pretty stable against major currencies such as the US Dollar, Euro and Sterling although with many investors now coming from Russia what happens with the Rouble against the Baht probably depends more on the political and economic situation in Russia far more than any events in Thailand with the rouble recently suffering it’s largest drop in over 15 years.

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In the medium term again it is likely that we will see stability although some analyst believe that the baht should be devalued in order to encourage overseas investment however with the culture of Thailand preferring to ‘save face’ this would seem unlikely.  In the long term, assuming that Thailand adapts well to the ASEAN community and continues it’s strides to becoming a first world rather than a developing country, you would have to say that over time you would expect the baht to strengthen although in reality this is some way off and should not really influence your decisions about buying property in Thailand.

All in all with the stable baht, Thailand really is a great place to invest.

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