Thailand Real Estate Market Outlook in 2023 (First Quarter Edition)

Favourable economic and real estate indicators herald a promising start in 2023 for Thailand. The signs of improvements and growth are consistent with the final quarter of 2022.

With Thailand's GDP showing recovery, international visitor numbers above expectation, and generally a more positive outlook, it seems the Thai real estate market is on the way up. 

This article summarises some trends and forecasts in the residential property market.

Economy
The Bank of Thailand forecasts GDP at 3.6% in Q1 2023, showing an increase from the forecast of 3.2% for Q4 2022. To put this in perspective, the pandemic hugely impacted Thailand's GDP, with 2021 running at 1.5% and 2020 at -6.2%. 

The uplift has been primarily driven by increased international tourism and continued domestic demand. Target tourist numbers in 2022 were 12% higher than forecast, and 2023 has continued strongly. With China abandoning its zero-Covid policy and re-opening borders in early January 2023, Thailand welcomed over 160,000 Chinese tourists in the first 6 weeks of 2023. 

While recovery is underway, some factors could hinder it. These relate to sustaining the growth in tourism, low-income earners' debt levels, business and non-resident investments, low competitiveness of some industries, and possible uncertainty of policy direction following the 2023 election. Additional risks include external impacts like the ongoing Russia / Ukraine crisis, China-Taiwan tensions, the Thai export market's vulnerability to a global downturn, and baht fluctuations.

Residential Real Estate Market Outlook
The market is broadly split into three sectors with slightly different results and forecasts.

1) Downtown Condo Market
New downtown condo launches slowed remarkably during the last three years compared to pre-Covid. In 2019 approximately 12,000 new units came to market, compared to approx 5,000 units in 2020 and 2021 combined and 3,498 in 2022. 

Developers are expected to launch many more units in the downtown market in 2023.

2) Midtown and Suburban Condo Market
This sector also suffered considerably during 2020 and 2021. Interestingly, it bounced back strongly in 2022 to almost 50,000 units, nearly reaching  2019 new supply numbers. The focus on affordability spurred this growth rate. 

The forecast of new supply for 2023 is 50,000. New projects may have a mix of residential and commercial. Developers are emphasising more on maximising space and functionality, providing green areas, recreational facilities, and technology.

3) Low-Rise Housing Market
The new housing supply was less impacted than the condo market. In the mid-range market, new houses dipped to approx 20,000 in 2021 before rising again in 2022 to almost 35,000. The same as the 2023 forecast.

Surprisingly, the luxury and super luxury supply grew exponentially. In 2022, the new launches were four times higher than the previous seven years' average. The super-luxury launches in 2022 exceeded the total launches of the last seven years. This trend in the post-pandemic era is expected to continue.

Trends
If you wonder why the low-rise housing market bucked the trend, buyers' wants and needs have changed. Many prefer houses as they provide greater space and privacy and are better suited to multi-generational living. Working from home and hybrid models have forced people to reconsider and make lifestyle changes. 

With this change, condo developers are focusing on selling the RTM unsold stock, with many taking a wait-and-see approach to new launches. They are also reassessing or redesigning projects to satisfy buyers' needs.

The foreign market is a vital component of future growth. Holidaymakers are frequently impressed by Thailand, with many returning to purchase property, particularly condos. China has always been a key segment. However, it is suggested that more interest will be forthcoming from second-home buyers and investors from South East Asia and the Middle East.

Other Considerations
The market recovery may be impeded by other factors. Loan interest rates have risen by 1 percentage point in the last eight months. Inflation reached almost 8% in mid-2022, falling to 3.79% in February 2023; however, it is still somewhat higher than historical data. 

The construction price index of traditional homes had a year-on-year increase of more than 5% for 2022, according to REIC, the Real Estate Information Center. Whilst some predict an increase in condo prices, other real estate experts suggest prices will remain stable as developers try to clear unsold inventory.

To sum up, the residential property market in Thailand is definitely moving in the right direction. Contact our real estate team today if you are considering investing in Thailand and need to fine-tune your knowledge of property market values. With offices throughout Thailand, Lazudi can assist with your property needs.