The outlook for 2023 economically and for the Thai real estate market continues to be promising. With Covid-19 in the past, generally speaking, businesses and people are no longer engrossed and distracted by the pandemic.
Tourist numbers rebounded in 2022, and in the first half of this year, Thailand welcomed over 11 million international visitors. The Tourism Authority of Thailand has increased its 2023 forecast to 23 million and 30-35 million in 2024.
The Bank of Thailand's GDP growth is 3.6% for 2023, and statistics indicate six consecutive periods of expansion. The growth trend in tourism positively impacts many industry sectors, including real estate. These and other factors are helping to drive the economy and consumer confidence.
Conversely, although trends signify recovery, some factors may hamper growth. The tightening of lending due to persistent high household debt and the rising interest rates may hinder consumer spending. The REIC fourth quarter of 2022 statistics indicate a 5.6% increase YOY in the construction price for standard homes, spurred by increased materials, energy and labour costs.
Furthermore, the ongoing Russia and Ukraine crisis, China and Taiwan tensions, the decline in exports and the uncertainty following Thailand's May 2023 general election may impede progress.
Property Market
The property market in the post-pandemic era has altered. People's expectations have changed slightly, too, with a focus on an improved work-life balance and health and well-being. This has led to a shift in housing requirements.
Trends indicate some domestic buyers prefer low-rise, less than eight-floor buildings with more space and adaptable areas. Working and studying at home, even one or two days a week, has become more common. Subsequently, residential designs with an office or spare room or buildings with co-working spaces have become increasingly sought after.
The pandemic also led many people to adopt a healthier lifestyle with more exercise, relaxation, improved diet, etc. Savvy developers have been watching this space and designing projects with a range of facilities to suit an active lifestyle.
Additionally, many consumers are concerned about climate change, therefore choosing housing with green credentials to reduce their carbon footprint and save energy and other costs. Such developments are expected to increase market value more than non-green buildings.
Downtown Condo Market
New downtown condos slowed considerably during 2020 and 2021. Even in 2022, less than 70% of the pre-Covid numbers were launched. In 2023, the forecast is approximately 7,000, still some way off the 2019 launches of about 12,000 units.
According to a recent Bangkok Post article, the 2023 new launches are unlikely to be priced higher than existing inventory, as developers still need to move older stock. In essence, developers are reducing their profit margin to absorb increased costs in development and construction.
Considering the resale market, some owner occupiers and investors are attracted to older condos, often with more space than newer builds. Renovating and refurbishing such condos can provide more room and flexibility for individuals and families.
Midtown and Suburban Condo Market
The midtown and suburban condo market also suffered during the pandemic, particularly in 2020 and 2021. However, it bounced back more quickly in 2022, with almost 50,000 new launches, nearly reaching 2019 new benchmarks. This market recovered more quickly than downtown condo launches, potentially spurred on by more affordable prices for domestic buyers.
Many of the new projects feature a mix of residential and commercial. Developers are creating more imaginative designs maximising space and functionality. Co-working areas and shared recreational facilities like fitness centres, swimming pools, saunas, onsens, rooftop spaces and gardens are being incorporated.
Low-Rise Housing Market
This market segment has not suffered like the condo market, with a dip pre-Covid in 2019, continuing in 2020 and 2021. In 2022, new launches were almost 35,000, almost reaching the 2018 level.
Perhaps the most significant change is the growth in luxury and super-luxury housing, with 2022 super-luxury launches exceeding the previous seven years.
Alternate Locations
Research by Krunsgsri shows a strong demand for condo high-rise housing in provinces heavily dependent on tourism, including Phuket, Chiang Mai and Chonburi. Many foreigners buy condos to live or holiday in Thailand or as an investment to place into the rental pool. However, it isn't just foreigners. Many Thais are looking further afield, away from the more expensive Bangkok market.
Developers in some of the more populous provinces are also building affordable condo projects, particularly in Khon Kaen and Rayong.
If you are considering investing or becoming an owner-occupier, selling, or renting a property in Thailand. In that case, Lazudi is a real estate expert with offices throughout Thailand. Contact us today.
