If the government continues to flip-flop on foreign investment regulations, a lot of foreign property investors in property Thailand will either move back home or to areas they are comfortable with, says Stephen O'Brien, a real estate veteran who is moving to Dubai after being in Bangkok and Phuket for several years.

Investors would prefer to be in countries where they can wake up one morning and not find that key legislation is being changed without public consultation, he said. ''I think that if you're going to spook the market and people are going to get too concerned about what's happening, they'll just go back to what they know.''

The investment shift is unlikely to be to other Southeast Asian countries, however. Mr O'Brien notes that Bali attracted a large inflow of foreign property buyers, many of whom stayed on after the first major bombing in October 2002 but pulled out after the second one in 2005.

''You're starting to see a very aggressive campaign in various Australian states urging people to stay at home and travel within their own country,'' he said.

Foreign property buyers could easily go elsewhere because they have the money and the willingness to invest but they don't want obstacles, he said.

''You put one obstacle in, okay, your lawyer can work around it, but when you put up a dozen obstacles it just becomes impossible to manoeuvre your way to the finishing line.''

Mr O'Brien believes that buyers of million-dollar villas in Phuket have probably been talking to their lawyers and financial advisers in their home countries, and they could be warning their clients to be cautious.

''I know people here _ farangs and expats who have money, just basically savings money, and they're scared what's going to happen to it. Will the government change its mind and suddenly all foreign accounts in the banks are frozen?

''That's bizarre thinking but people are afraid of that. That's the extreme but that's what people are thinking because it's so easy now to change things _ what's going to happen in the next five years?''

Despite these fears, Mr O'Brien does not see panic gripping the resort property market, barring further surprises or flip-flops from the military-installed government.

''Are there going to be bargains in the market? I don't think so. We were all expecting the bargain-hunters to come in for fire sales after the tsunami but in fact the reverse happened _ prices increased.''

Mr O'Brien, who headed the Phuket office of the agency Knight Frank for four years, noted that while discounting has not taken place in Phuket over the last three to four months, there has been a slowdown. However, this could be because there are now more real estate agents on the island.

What is upsetting the market is that in other countries, major amendments to key legislation such as the Foreign Business Act would normally be subject to a lengthy public consultation process and not be implemented overnight.

''In all honesty I think the days of owning freehold villas, no matter whether this corrects itself when the next government comes in and opens [the market] up again, I just think those days are gone,'' he said.

''We've seen over the last six months that the goalposts can move and I think that's going to throw an incredible amount of foreign business out of the door.''

Mr O'Brien also laments the fact that there is no strong advocate for real-estate agents in Thailand. ''We needed a strong body to actually lobby the government from time to time about these changes and what the implications are; we never saw that.''