Thailand's property market has endured some rocky times over the past 18 months, but with the upcoming election due on December 23, investors and developers are looking forward to a more prosperous and stable 2008. Consumer confidence and investor sentiment was already ebbing away during the six months of political protests that finally led to the fall of the Thaksin Shinawatra-led government. All things touched and trumpeted by the previous government have been eyed with great suspicion, including the way that international investors were courted and encouraged to bring their dollars to Thailand. 'Since the military coup, local consumer confidence has subsided, particularly in relation to large ticket items,' said Raimon Land chief executive Nigel Cornick. 'Car sales have dropped in the luxury segment which is a traditional indicator for the real estate industry.' As head of one of the country's leading international property developers, Mr Cornick said he hoped a new government would be more positive in encouraging foreign investment. 'The interim government has made a series of economic policy decisions that have impacted on foreign investment and economic growth. The referendum to accept the draft of the new constitution produced no clear outcome to stimulate investor confidence. 'Several proposed foreign investments have been stalled as international companies and individuals have adopted a wait-and-see approach. 'The favoured nominee structure for foreigners to purchase land and property using a Thai company is under a cloud - meaning that freehold sales in the villa market have slowed down significantly. These combined factors are contributing to uncertainty, and a new government with a proactive approach to foreign investment and clear policy reforms could reignite the property sector to pre-coup levels.' The developer is leading Thailand's luxury condominium charge with The River project in Bangkok on the banks of the Chao Phraya River next to The Peninsula Bangkok and Northpoint Condominium Pattaya. The development is 90 minutes' drive from the new Suvarnabhumi international airport. Mr Cornick said he was confident that the market had enormous potential going forward. 'The property market in Thailand remains undervalued, especially when compared to established regional markets such as Hong Kong and Singapore and strong emerging markets like Mumbai and Dubai. 'Once the recent instability is overcome, the market should continue to increase to levels comparable to these markets. The three-year outlook is positive as overseas investors appreciate the lifestyle and cost of living advantages that Thailand has to offer. The domestic market is maturing as it becomes more internationally aware and willing to match overseas prices.' John Chan, manager of L&A International Properties (HK), agreed. 'If you compare the Far East market, the property price of Thailand is a lot less than Hong Kong, Singapore and mainland China. The key thing is the lower price doesn't mean the property is lower quality in Thailand. 'The economy is enjoying steady growth since the financial crisis. The relationship between the Thai government and western countries is good. These are some of the reasons why overseas investment keeps pouring in.' Capital gains and respectable yields* are expected for early entry point property investment in Thailand going forward, with Raimon Land development's The Legend Saladaeng in Bangkok returning 6 to 8 per cent and its resort development Northpoint in Pattaya returning 8 to 12 per cent. CB Richard Ellis (CBRE) Thailand chairman David Simister believes the high-end condominium market in Bangkok's CBD offers strong rental prospects. 'Expected yields are in the region of 5 to 6 per cent in prime areas such as Sukhumvit, Sathorn and Silom,' he said. 'Investors who buy off-plan can also expect a capital appreciation in the region of 15 to 20 per cent from project launch until completion.' Athenee Residence, one of CBRE's sole agent projects in Bangkok, will be ready for residents to move in early next year. It has experienced significant capital appreciation since its launch in the fourth quarter of 2004. Launched at 90,000 baht (HK$22,430) per square metre, prices have now reached 135,000 baht a square metre. 'In 2007 several high-end projects launched successfully, including Sukhothai Residences. We expect a jump in value in high-end Bangkok condominiums and more projects launching in excess of 200,000 baht per square metre next year,' Mr Simister said. Phuket, which has been the darling of international resort investors in Asia for several years, continues to expand. Investors there are experiencing a capital appreciation of more than a 100 per cent (in 10 years' time) on prime beachfront and sea view locations, with rental yield in the region of 6 to 8 per cent, according to CBRE. Other properties which are increasingly popular among foreign investors are residences managed by hotel brands such as Shangri-La and Jumeirah. These properties are fully managed to five-star standards and have rental potential through hotel rental pools. 'On the resort properties side, Phuket, Samui and other established and emerging resort areas will continue to offer potential for capital appreciation in prime areas,' Mr Simister said. 'Areas of development in Phuket have extended to the east coast where there are several luxury developments under construction such as Cape Yamu and Jumeirah Phuket Private Islands. 'Phang Nga is developing to become an extension of Greater Phuket due to its proximity to the airport and quality projects such as Raffles Phang Nga. Samui is also trending upmarket and attracting luxury developments such as W Retreat and Residences.' In Phuket, Cape Yamu stands out as the development of the moment, clearly aimed at attracting luxury property buyers. 'Firstly, the architecture and design by Jean-Michel Gathy and Philippe Starck certainly make The Yamu unique,' said Scott Gorsuch director of communications and client services for the project developer, Campbell Kane (Thailand). 'It is Starck's first resort in Asia and his signature style will certainly set us apart. Secondly, The Yamu is Adrian Zecha's first hotel in Phuket since he founded the legendary Amanpuri 20 years ago. 'Thirdly, The Yamu is the first resort to focus on Phang Nga Bay as a destination. This is one of the most incomparably beautiful bodies of water in the world, and its location on the tip of the Peninsula, and 39-berth private marina combine to make views of [and access to] this aquatic playground practically instant.' While Thailand has endured an uneasy 18 months of political and economic turbulence, which has certainly had an impact on the speed of growth for the property market, keeping many investors away, a long-term confidence in the sector remains. Property developers continue to plough dollars into both the urban and resort markets in the country in anticipation of a newly formed government and consecutive years of growth and stability. Given the long-term forecasts for Thailand and its tourism industry's bright future, it appears that investors with the gumption to get in now will still receive solid returns on their investment. * Rental yields are calculated by dividing annual rent by property value, excluding operating costs such as maintenance and insurance.