Internal political problems are having a greater impact on the Thai property market than the global economic crisis, with no transactions made by foreign buyers and investors so far in this traditionally high season, said Duangjai Kraus, managing director of the Hua Hin branch of the property consultant Engel & Volkers (Thailand) Ltd.

She said many foreign buyers did not appear to get units after booking or making a down payment. Worse, some decided to return units while new deals had vanished as buyers decided to wait and see.

Potential buyers including Britons stepped back as they were also facing a financial crisis at home. But Scandinavians, who regularly visit Hua Hin, still come to their second homes in the beach town.

"Normally from October to February, we are very busy with a great number of property transactions but this year the number of deals plummeted by 70-80%," she said.

She added the company might suffer around 500 million baht in lost sales during the three months.

The hotel business in Hua Hin is also facing a drop in occupancy rates despite a recovery to 60-70% last month, with one luxury hotel alone receiving cancellations of 80 rooms.

One of the big deals under negotiation is the acquisition of a golf course by a South Korean who planned to spend around 700 million to two billion baht. Last month, he checked out some golf courses in Bangkok, Hua Hin, Pattaya and Chiang Mai.

"But he did not confirm when he would come again to review the potential golf courses before making the final decision," said Mrs Duangjai. "He is also eyeing a golf course in Vietnam and he might buy it."

As domestic political tensions have not been resolved, she said the company did not get any feedback from an investor from the United Kingdom who wanted to buy a large plot of land to develop a golf course and another one from the United States who wanted to take over a hotel or resort. Both deals would be worth around one billion baht each.

"It might take at least two years to rebuild the confidence [among foreign buyers and investors]. Everything should improve by the first quarter so that we will be ready by mid-year [2009] to fully welcome a return of buyers, investors and guests in the next high season," Mrs Duangjai said.

Phanom Karnchanathiemthao, managing director of the property consultant Knight Frank Chartered Thailand, said there were no deals and inquiries in the past week. In the past two weeks, property sales dropped by more than 50%.

"All potential transactions targeted in December to January were cancelled. We cannot expect future transactions from foreigners," he said. It might take three weeks to be able to estimate the impact from the closure of Suvarnabhumi Airport.

"The global crisis is bad but the political problems are even worse so the negative impacts may not double, but tripled or quadrupled," he said. Foreign investors have many choices for investment now including the US, Europe, Australia, Singapore and Hong Kong.

"The global crisis can be planned and managed but political problems cannot. Investors can plan their moves based on economic policy but they cannot see solutions to the political problems as it is very difficult to guarantee that no such political problems will reoccur in the future," said Mr Phanom.

He said that the number of new project launches had been reduced in the third quarter, and that this month there would be no new project launches as developers needed to postpone their schedules.

"In a way, this is good for the industry, as demand and supply is going reach a balance and there will be no oversupply."

The overall performance of the property market is expected to fall in the next two years due to the weakening demand and lower pricing power, according to the securities firm CIMB.

CIMB has cut its net profit forecasts for fiscal 2009 for all companies its analysts cover by 11-25% and for 2010 by 2-30% on the back of possible further GDP growth downgrades, signs of a property demand slowdown, expected gross margin contraction and heightened political tensions.

Gross margins for developers under its coverage are also expected to fall by 1% to 2% next year, offsetting the positive effect of moderating construction costs