Overview
The last couple of years has impacted every aspect of the economy, including the real estate industry. The Covid pandemic caused a slowdown in the completion of existing projects and delayed the commencement of new developments.
Travel restrictions eased in late 2021, and the Thailand Pass ended recently. However, the ongoing Russia and Ukraine conflict and China’s Covid-19 lockdowns have had a considerable global impact, with rising fuel, energy, food and resources cost increasing significantly and causing a surge in inflation.
According to Statista, June 2022 figures indicate the UK and US running at over 9% inflation and Thailand at 7,6%. Thailand is expected to be 4-5% for 2022. Rising costs, inflation and economic uncertainty significantly impact consumer confidence resulting in more cautious spending and investing.
Another factor is the weakening of the Thai baht against some major currencies. The export market benefits as Thai products are more competitive; however, businesses relying on imported products experience increased costs and challenges.
How is this playing out in the Bangkok residential market?
In late 2021 and in 2022, there have been signs of recovery with Covid changing to endemic status and more visitors entering Thailand. Developer confidence improved with a significant increase in the supply of units coming to the market. Developers have launched more new projects compared to 2021, with over 14,000 units becoming available in Q1 2022, in contrast to just over 4,000 units in Q1 2022. Condominium prices in the Bangkok real estate market have remained relatively stable.
Without foreign visitors and investors, developers targeted the domestic market, particularly end-user buyers. This has meant developers have changed some projects to more directly satisfy local buyer requirements.
Location has been a key factor, with Bangkok’s suburban areas seeing greater growth in the condo market with several new project launches, whereas downtown Bangkok has remained quiet. Additionally, there appears to be a high demand from domestic end user buyers for condos priced in 1-3 THB and considerable demand in the mid-economic price range. The high-end of the market continues to do well.
Buyers and investors planning to rent properties are also seeking condos close to rail connections. Thonburi has reported price growth, particularly Thawi Watthana and Taling Chan benefiting from the SRT Light Red Line. Bangkok Yai has also benefited from the MRT Blue Line.
Climate change is also playing a significant role, with 40+% of the world’s greenhouse gas emissions coming from buildings during construction, occupation, and use. Gen Y’s, representing around 50% of the population, actively seek homes impacting the environment positively. Add to this surging energy costs, and sustainable green buildings are highly appealing to most buyers and investors.
Another change developers have needed to address in developments is lifestyle. With the increase in ‘hybrid work’, many new condos provide co-working spaces. Buyers seek condos with quality recreational facilities like good-sized swimming pools, well-equipped fitness centres, gardens and recreational space, thereby reducing the need to travel. Clever use of space within condos is another highly sought-after feature.
Looking Forward – A Few Words from our Bangkok Property Team
“Although inflation negatively affects most property investors in Bangkok, major property developers have announced many new off-plan projects in the later half of 2022, aiming to flood the market with more exciting projects to satisfy demand. Plus, many developers are pushing the construction of existing projects to finish within this year.
The weakening Thai Baht has drawn much attention from overseas buyers to the Bangkok property market. Considering the supply of condos and the weakening Thai baht, this could be the perfect time for overseas investors seeking a long-term property investment to buy property in Bangkok and a good return on investment in the long run.
We expect a massive spike in demand for Bangkok’s ready-to-move-in property in the last quarter of this year.”
Foreigners can buy property in Thailand, and whether you are moving to Bangkok or considering investing in Thailand, now is a great time to start searching. We also have many motivating options if you are looking for commercial real estate in Bangkok. Give us a call.
