The party of the Thai prime minister Anutin Charnvirakul, a staunch royalist and shrewd political dealmaker, is on track to win the most seats in Sunday’s election after a disappointing night for his rivals in the youthful, pro-democracy People’s party.

“We are likely to take first place in the election,” the 59-year-old told reporters at the headquarters for his Bhumjaithai party in Bangkok. “The victory today belongs to all Thais, no matter whether you voted for us or not,” he said.

Bhumjaithai, which is seen as the preferred choice of Thailand’s powerful military royalist establishment, had taken a big lead with more than half of votes counted, and Thai TV channels projected it would be by far the largest in parliament.

Natthaphong Ruengpanyawut, 38, leader of the People’s party, conceded defeat, telling supporters at the party’s headquarters: “Even though we can not establish a government today, I want everyone to keep walking, keep going and don’t give up. Let’s keep fighting as long as we still have elections.”

The People’s party had been leading polls ahead of the election, but with more than half of votes counted on Sunday night it was in second place, with Pheu Thai, the party linked to the now imprisoned former populist leader Thaksin Shinawatra, third.

The result is a major blow to Thailand’s pro-democracy camp, which won the most seats and votes in the last election but was blocked from power by rivals in the military royalist establishment. Two previous iterations of the party were dissolved and its leaders banned from politics in rulings by the constitutional court, which frequently intervenes in Thai politics.

The People’s party has a loyal support base among young and urban Thais who want reforms to make Thailand, which has a history of military coups, more democratic.

Anutin has been prime minister since September, taking office after Paetongtarn Shinawatra was removed for an ethics violation connected to her handling of a border dispute with Cambodia. He dissolved parliament in December to call a new election when he was threatened with a no-confidence vote, and just as conflict with Cambodia had re-erupted.

He has sought to present himself as the only leader committed to protecting Thailand’s territory, riding a wave of nationalism prompted by the border conflict.

Bhumjaitai pledged to build a wall across the border, and to offer an incentive of 15,000 baht (£350) a month to those volunteering for the armed forces. At a recent campaign rally he said that if Thai people wanted a government “chosen by Cambodia” they should vote for his rivals.

The People’s party, which has long campaigned for the army to be more accountable, was accused of being anti-military – a position it rejected.

Dr Napon Jatusripitak, a visiting fellow at ISEAS–Yusof Ishak Institute, said Bhumjaithai had been uniquely placed to benefit from such nationalism. It had also succeeded in leveraging its links with powerful political families that are able to deliver votes, balancing this by appointing “a front-facing layer of technocrats”, he said.

“This arrangement allowed the party to stay anchored in patronage politics while broadening its appeal to conservative voters who might otherwise find this traditional style of politics unpalatable.”

Bhumjaithai had, Napon said, positioned itself as a force for stability at a time when many voters were wary of the political disruption associated with sweeping structural reform.

Anutin, the son of a former cabinet minister, comes from a family that owns one of Thailand’s biggest construction companies, responsible for some high-profile developments including Bangkok’s main airport. He did not comment when asked what a future cabinet would look like.

At the headquarters for the People’s party, where supporters had turned out to watch results, the mood was glum on Sunday night. Kanawat Sombunpot, 27, an accountant, said she was heartbroken, and believed Anutin had benefited from nationalism linked to the war with Cambodia.

It was hard to think of what the People’s party could do differently, she said, adding that it had already dropped its policy to amend Thailand’s lese-majesty law, under which criticism of the monarchy can lead to up to 15 years in prison.

“If [the party] adapts any more it will be grey and the same as other parties,” said Kunawut Watcharapitchaiyakul, 26, who works in marketing and had come to watch the results at the party’s headquarters.

The People’s party had pledged to fight corruption and differentiated itself by promising major reforms to make the country more democratic, break up big monopolies and modernise the education system.

Kunawut questioned whether some members of the public had taken issue with the People’s party’s past decisions, especially where it appeared to put ideology or a clean image over pragmatism. However, he said he believed this approach would benefit the party in the long term by building trust. “It’s going to take time,” he said. “Maybe 10 years.”

“I won’t give up,” he added. “But I’m tired.”

Agence France-Presse contributed to this report