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The Thai army says it is imposing martial law amid a political crisis "to preserve law and order", insisting that this is not a coup.  The intention is apparently to calm the situation, while working for a compromise between reds and yellows after eight years of upheaval, which have pitted the largely rural supporters of populist former Prime Minister Thaksin Shinawatra against Thailand's traditional elites.

The populist businessman and politician Shinawatra was first removed from power in 2006 by the army, and then fled Thailand in 2008 after being given a jail term for corruption.  His allies then won the first post-coup polls, but were later removed by the courts.

In 2010, his supporters occupied parts of Bangkok, where around 100 people died amid clashes and the following crackdown. In the elections of July 2011 Shinawatra's sister, Yingluck, came to power in a landslide, and has faced rising protests from the yellow shirts. 

She was then removed by the courts, and her government has now been ousted by the military. 

The problem seems insoluble.  The people keep electing Shinawatra and his allies, but the elite won't wear it, for good reason.

Do the military and the elite have the right to prevent the country being ruined by the results of the popular vote?  Whatever the answer, the divide is deep, dangerous and will surely lead to disruption and bloodshed.

Thailand's economy has a long record of ignoring coups.  The army has staged at least 11 coups since the end of the absolute monarchy in 1932.  Yet Thailand’s economy grew by an average of 5% annually from 1999 to 2007.

Recent disruptions did slow growth to 2.9% in 2013, a sharp slowdown from a real GDP growth rate of 6.5% in 2012, according to the International Monetary Fund (IMF).  But there is no evidence that Thais cannot combine work and street-fighting.  It's almost a tradition.

In fact it was strong economic growth that pushed the Thai price index for single detached houses up by 5.71% (3.74% inflation-adjusted) during the year to end-Q1 2014, after annual house price rises of 5.61% in Q4, 5.34% in Q3, and 6.17% in Q2 2013, according to the Bank of Thailand (BOT).

The condominium index, which increased modestly by 3.76% (1.82% inflation-adjusted), is actually a more relevant index, since condominiums are what Bangkok people tend to live in.  The price index for townhouses rose by 6.17% (4.18% inflation-adjusted) to end-Q1 2014, and the residential land price index surged by 7.04% (5.04% inflation-adjusted)

Property demand has been soaring. The value of land and building transactions surged by 16.5% in 2013 to THB991.3 billion (US$30.6 billion), according to the Department of Land, Ministry of Interior. The Central region accounted for about 62% of all transactions, followed by the Eastern region (13%) and the Northern region (9%).  Total property credits outstanding rose 14.4% in 2013, to THB2.05 trillion (US$63.2 billion), according to the Bank of Thailand.

Thailand property pricesResidential building licenses also by 12.8% in 2013 to 84,023 units, according to the Department of Land.  Condominium registrations surged 25.1% to 102,200 units. New houses in Bangkok Metropolis, including apartments and condominiums, self-built houses, and housing projects, also increased by 5.6% to 131,954 units in 2013.

All this happened while demonstrators were fighting in the streets.

Nevertheless, political instability has a price.  Industrialists and investors are scaling down their investment.  The economy is projected to grow by a modest 2.5% this year.  A warning sign: LPN Development, Thailand’s biggest condominium developer, recently cut its new project plans by almost 50%  in 2014 due to the ongoing political turmoil and sharply slowing economy.

Now the initiative is with the army, whose job it is to knock some sense into the warring parties' heads.  This will not be easy.  The King is old and relatively inactive. There is little confidence in the succession. So, expect a sharp slowdown.  Temporary or long term, who can tell?  If history is a guide, this too will pass.

This article was republished with permission from Global Property Guide.