The content of this report will be updated with the latest scenarios based on the global COVID-19 Pandemic
The Thai economy is expected to grow in 2020 as its tourism and exports are a steady growth indicator. The number of ex-pats applying for work permits, as well as foreigners, who want to live in Thailand full-time, continue to rise steadily.
The Thai Residential estate market is growing marginally. There?s been tighter mortgage regulation, higher interest rates, and slowing economic growth, not to mention the country’s volatile political situation. The residential market is likely to fall by 10% this year as the impact of the economic slowdown and loan-to-value (LTV) limits continue into the fourth quarter. This indicates a steady growth factor for the Thai residential real estate market in 2019.
Tighter mortgage regulation and the recent increase in interest rates from the Bank of Thailand will pose challenges for condominium developers in 2019. Many developers are launching condominium projects with asking prices of over THB 300,000 per square meter and the average price comes to THB 250,000 per square meter. Developers have also been implementing other unique selling points in their projects to attract buyers. Home automation, rental management schemes, and mixed-use developments are some of the selling points in the market in Thailand.
Key Market Trends
Growth In New Housing in Bangkok Metropolis and Vicinity is Helping Residential Real Estate in Vietnam to Grow
Thailand boasts a unique real estate market, which is quite stable, despite the economic and political volatility that has occurred throughout the country. This is especially true in Bangkok. The total number of new housing plunged 40.8% y-o-y to 20,883 units in Q1 2019 in Bangkok Metropolis and vicinity. Over the same period, new apartments and condominium units in the metropolis plummeted by 64.5% to 7,961 units while housing projects fell by 4.5% to 7,786 units. On the other hand, self-built housing rose by 9.4% y-o-y to 5,136 units in Q1 2019. In Bangkok Metropolis land development licenses are also rising strongly by 14.7% y-o-y to 2,782 units in Q1 2019.
Ananda Development and Origin Property have announced plans to develop several hotels and serviced apartments in Bangkok and the Eastern Economic Corridor. Ananda Development has partnered with Ascott Limited to develop five serviced apartments valued at THB 12 Billion, four of which will be in Bangkok and one in Pattaya.
Increasing Foreign Investments Into Thailand’s Residential Real Estate Market
In recent years, minor changes in Thai law have allowed nonresidents to further explore the Thai real estate market. There has been a rise in FDI investment in real estate activities in Thailand in 2018 compared to 2017. According to Sansiri Pcl, there is a rise in real demand from foreigners despite challenges as they account for 30% of total sales.
The Bangkok metropolitan area was a prime investment location for China. Chinese buyers of condominiums have jumped dramatically over the last two years. The increase in Chinese buyers of Thai condominium property has partially been due to increases in restrictions or increased taxes for foreign buyers in other markets.
Thai banks are being conservative about new project lending to developers, so Thai developers are seeking funding from foreign partners. Most joint ventures to date have been with Japanese investors on a project-by-project basis for condominiums.
Large developers dominate the market with a high concentration rate. There is high Competition in the Upper End of Condominium Market in Thailand. The slowdown in the condominium market has encouraged major residential developers to consider diversifying their portfolios into other property sectors such as office, hotel, and serviced apartments. Major real estate players in Thailand Residential market are Sansiri Public Co. Ltd, Supalai Company Limited, Property Perfect and Pruksa Holding.
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