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Thailand Real Estate Market Update
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80% of condos in Thailand sold to Foreigners, 50% China
A real estate firm is predicting that the market for condos in Thailand hot spots like Bangkok, Phuket, and Pattaya will be rebounding soon with the continued trend of foreign investment, a majority of which are Chinese. China has long been a driving force in purchasing condos in Thailand.
The business development manager of Saensiri is predicting the uptick once Covid-19 outbreaks are wrangled and brought under more control and general vaccinations across the Thai population increases. The manager said that foreigners make up the vast majority of those purchasing condos throughout Thailand, with 80% of the 325 Billion THB industry being driven by international buyers.
Of those international buyers, Chinese investors are by far the most dominant purchasers, with 50% of all acquisitions of condos in the last 2 years coming from China and another 30% coming from Hong Kong. The last 20% of buyers also include Taiwanese clients, some American customers, and then mostly buyers from European countries, especially those in the United Kingdom, France, and Germany making purchases of condos.
While statistics show that the majority of westerners look towards purchasing condos in Thailand as a destination for a holiday home, they are still keen on renting out their home when they are not residing in Thailand. On the other hand, the majority of buyers from Hong Kong and China seek to purchase condos in Thailand as an investment and aim to make them purely rental properties.
The real estate firm believes that once Covid-19 is not an issue dominating travel and entry into Thailand, the market will recover swiftly. How soon and how quickly that occurs remains to be seen.
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Market Shares in Thailand
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Bangkok Land Prices Rising
While Bangkok land prices are hardly on a tear, they continue to rise even amid the economic uncertainty brought about by the Covid-19 pandemic. Figures from the Real Estate Information Centre, known as REIC, show a quarterly rise of 0.5%, and a yearly rise of 7.6%, in the land price index in Greater Bangkok in the third quarter. As reported by the Bangkok Post, acting Director-General Vichai Viratkapan has pointed to landlords opting to hold plots while waiting for an economic recovery as a major factor in the comparatively slow index growth.
Viratkapan noted that, while prices continued rising despite the economic slowdown.
Locations hosting mass transit lines, along with areas in proximity to extension lines, in particular the Nong Khaem and Bang Khae districts, accounted for the majority of the index growth. Viratkapan said that the price rise “was driven by those along the Blue Line’s Hua Lamphong to Bang Khae section which started operation in September 2019”.“The growth rate was lower than the five-year average for three consecutive quarters or since the first quarter of 2021 due to the economic fallout”. By way of comparison, the five-year quarterly average for the period 2015-19 was 4.1%.
Meanwhile, the Orange Line from Taling Chan to the Thailand Cultural Centre accounted for the second largest increase in growth, with land prices in the Bangkok Yai, Bangkok Noi, Khlong San and Phra Nakhon districts going through the roof.
As reported by the Bangkok Post, REIC monitors the prices of undeveloped land in the Bangkok, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon and Nakhon Pathom provinces, using 2012 as its base year. In producing the survey, it only refers to vacant land sized from 200 square wah.Comment
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Thailand makes top 5 list of places to buy real estate overseas
Thailand has made number 4 on the list of best places to buy real estate overseas, according to LiveandInvestOverseas.com. As the overseas property market is booming, thanks to the Covid-19 pandemic, the website says such property stands out among others, as it is a hard asset that provides diversification of asset class and likely currency. What this means, essentially, is that the opportunity to generate cash flow is high, and can help build long-term wealth.
The website says any type of buyer, new or experienced, can benefit from buying overseas property, and lists 10 countries that are the best in which to buy real estate. Panama, was listed as number 1 as its rental apartments and agricultural opportunities are thought to be the best. Moreover, the country’s relationship with China is expected to fuel its economy, with Chinese nationals expected to flow into the country, reminiscent of how they came to Vancouver back in the 1990s.
Brazil and the Dominican Republic came in 2nd and 3rd on the list, most notably for their diverse property markets and international residents that have helped the countries’ real estate markets for years.
Number 4 on this list is that of Thailand. As pre-Covid times saw millions of tourists flowing into the country, and Bangkok remaining the most-visited city in the world, Thailand is well-known for its strong economy and expanding tourism industry. Additionally, its agricultural sector is booming. Of course, since the Covid pandemic ravaged the economy, the planned reopening this November 1, has been welcomed by all who await the return of tourists and jobs.
Despite Thailand having some pretty strict restrictions on who can own land, (hence the name Thailand), the government has proposed several options that would, ideally, help it recover from the pandemic. One of those options includes the possibility of gaining a 10-year visa, which would allow a long-term stay without all the hassle of visa regulations. Another proposal comes in the form of allowing high-net worth individuals to buy land. Both of these things indicate that Thailand is on the upswing in improving its conditions for those who truly want to invest and help out the economy in the long-term.
Currently, non-Thai nationals can own a condo freehold as long as the ownership is not more than 49% of units in the condo building. For this reason, the condo market is where most foreign investors focus their attention, as well as having cheaper management costs than an individual property. As the tourism industry is set to slowly regain itself, now is the chance to invest. As it is truly a buyer’s market, with shocking Covid discounts, Bangkok is one of the best places to put your money.
Now, as Thailand sets to reopen,and more people have shifted to working from home, Bangkok’s low-rise condo projects are in high demand. As people want more spacious and comfortable living spaces, the pandemic has definitely had an impact on the type of housing in demand in Thailand’s capitol city.
Portugal, France, Mexico, Belize, Turkey, and Poland round up the list of the top 10 places in which to buy real estate abroad. For obvious reasons on some of them, and for not-so-obvious reasons on others. Portugal is another country where it is possible for non-residents to obtain a mortgage. France is quite obvious as Paris remains a hugely popular metropolitan city, offering long-term wealth for the foreseeable future. Mexico is popular as many Americans and Canadians prefer the nearby country for expat living and tropical holidays. Belize is still considered up and coming, despite it being relatively new to the international tourism scene.
Turkey is one that is surprisingly on the list as it has had a record-breaking year of property sales, up 107% from the same time last year. This is attributed to foreign buyers as a result of the successful CIP. Half of this year’s property sales took place in Istanbul, the country’s most vibrant and historical city. The city was also 9th in the world’s most-visited cities in 2018.
Poland made the last spot on the list, as it is thought to be Eastern Europe’s best-kept secret. The capital of Krakow, recently has seen a boom in tourists, and is expecting even more post-Covid.
Despite Thailand making the top 5, it will be up to the coming months to see if it truly can rebound after the Covid-19 pandemic wrecked the tourism industry, which is thought to account for up to 20% of its economy.Comment
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Covid-19 has accelerated Thailand’s property market disruption by 5 to 10 years
Real estate experts say the Covid-19 pandemic has accelerated a great disruption in Thailand’s property market that was supposed to take place over the next 5 to 10 years. Now, however, experts say it will arrive sooner. According to managing director of Chon Buri-based property developer, Ratanakorn Asset Co., Jugkarut Ruangratanakorn, there are 10 disruptive trends that will challenge the market in next year and beyond.
Economic, national, social and population structure
Thailand’s GDP growth has been lower than its potential for the past several years because of its slowing population growth. With no new resources, no foreign direct investments, no 5.0 industry to help boost economic growth and no new economy, the results definitely show. Thailand’s society is also ageing, with a rising number of senior citizens, and a declining birth rate. As the average family size is decreasing, the marriage rate is lower, resulting in a large number of single people. This situation is resulting in a decreasing need to purchase a new home for a family. As the new generation prefers renting and moving to newer condos, the new trend is influencing the property market.
A higher debt burden and low education towards developing assets
Thai people are getting into debt faster and deeper at an increasingly younger age. Currently, the household debt ratio is 93%. And, most of that debt stems from consumption and education, not property or business ownership. Thus, those who have debts cannot build wealth, as they also don’t have any assets. Furthermore, many locals don’t understand how to create wealth. Instead, they want to live a fast lifestyle and spend most of their money on consumption. As the pandemic has inflated assets worldwide, many governments have used quantitative easing to support their economies. The downfall of this move, is that is doesn’t create a real sector, demand or productivity, but increases asset values. For younger generations, assets and property acquisition signifies a long-term burden. And, with the rise in stay-at-home working, the internet has spurred a mentality that working mobility and residential relocation is an easier way to live. Rising costs in living also makes it harder to save money to buy property.
Experience and lifestyle
The new generation is more focused on their present lifestyles and experiences, rather than permanently holding assets. In the future, 2 groups will emerge: those who understand wealth creation and will be payees, and those who understand lifestyles, who will be payers. But the ratio between the 2 is uneven, with most becoming payers and not payees.
Property ownership follows all other ‘wants’
Owning a house or property will follow consumption, lifestyle, health and wellness, travel, education, and entertainment. This is due to most people having the perception that owning a home is a lifetime debt with payments lasting over 30 years.
Renting replaces buying
Renting will replace buying due the trends in desiring a convenient lifestyle. The ability to move, paired with smaller family sizes is a large, contributing factor. And, such potential buyers don’t want a long-term burden to hamper their already sluggish income growth due to the ailing economy.
Building and land taxes
Building and land taxes will burden potential property owners as such extra fees will dampen their purchasing powers. Those who want to invest in a property in the long run will see that higher property costs equate to higher taxes.
Regulations in property development
Property development regulations will also increase the cost of development. This results in higher household debts against a sluggish economic, population, and purchasing power growth. And, such regulations becoming a burden are not showing any signs of easing.
Other financial innovations vs. property
Digital assets, cryptocurrency, tokenisation, real estate investments, mutual funds, the bond and equity markets are starting to trump the property market. With these financial innovations, property ownership is no longer being held by a single owner. Thus, future investments will be in the holding of a unit trust, not an individual right of ownership. Those who have caught on to this trend will be defining the next era of property.
Location, location, location is no longer the answer
Despite having a great location, a project can still fail due to its price, product, design, and inability to meet consumer needs. Market trends and consumer behaviours are rapidly changing as each generation features different property purchasing preferences. And, the very definition of a ‘good location’ is constantly being redefined.
Sharing property
Co-working, co-living, multipurpose, timeshare and exchange programmes are defining the new area of property ownership. Now, these trends will yield more sharing choices for consumers instead of just owning a property alone.Comment
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Did the Sandbox impact on Phuket’s Property Market?
Over 42,000 travellers, in the months from July 1 to September 30, used the Phuket Sandbox as an international gateway to enter Thailand. For the island’s broad real estate sector, which has been challenged by the drawn-out, 18 months of the pandemic there have been a series of notable pivots within the residential property sector. With investment-oriented, yield-focused hotel residences on the backburner as tourism numbers dwindled, and high-value villa rentals unable to participate in the Phuket Sandbox SHA Plus hotel program, property trades have moved mainly by domestic buyers and sellers.
According to newly released data from Thai property marketplace FazWaz, from their Insights data app, there has been a notable lift in transactions of single-family homes in the price band of 8 to 18 Million THB. Comparing buyer interest between 2020 and 2021 for luxury properties above the 24 million Baht marker, 4 bedrooms or more have become the most popular home type with a 16% increase year-on-year. Speaking about the shift to bigger and more expensive homes, FazWaz CEO Brennan Campbell said they were receiving an overwhelming response to well-located properties in quality estates.
Another shift highlighted in the FazWaz Insights data is in the condominium tier, where previously red hot entry-level studio and one-bedroom units that commanded 71% of buyer interest last year, have now tapered down to 55%. On the flip side, 2-bedroom have moved up from 20% to 32%. Brennan is quick to note that Covid-19 placed more demands on property owners to now work from home.“Demand levels are outpacing supply, given many developers postponed or slowed-down construction on projects early in the crisis and are now trying to play catch-up.”
Taking a step back to talk about luxury property transactions, James Knowles, Director of Residential Sales at the Minor Hotel Group has spent most of the pandemic selling ultra-luxury resort homes to wealthy Thai buyers in Phuket. Talking about the shift in buyers from the legacy of the overseas high-net-worth individual to Thai’s he points out that their Avadina Hills by Anantara saw a surge in Bangkok buyers.“Flexible, larger spaces have now shot to the top of the list of priorities. We are also seeing buyers trade-up to two-bedroom condos to accommodate their lifestyle changes.”
Looking toward the remainder of 2021, the Phuket property Sandbox is anxiously awaiting the return of the winter Russian ‘snowbird’ market of long-stay travellers. With the Sputnik vaccine approved by Thai authorities, the period of November to March is expected to see a spike in Russian arrivals.“Transactions are now hitting the 3 hundred million Thai baht level for resort estate properties. Aside from sprawling ocean views, privacy and the added attraction of a hotel next door, a new object of desire for prospective owners are spaces left as cold shell areas, where customised rooms, areas or facilities can easily be added in the interiors of the mega villa structure. These spaces have allowed buyers to become more engaged and express their ideas while maintaining the overall integrity of one of Phuket’s most exclusive gated communities.”
Speaking to local sources, Eastern Europeans are a well-established source of property buyers, especially in the affluent Laguna area and premium renters of villas along the expansive western coastline. For now, despite the downturn, developers and agents view this as the first step back to a more balanced island real estate industry.Comment
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Thailand’s property market slated to return to pre-pandemic levels by 2023
Experts are pointing to 2023 as the year in which Thailand’s property market is expected to return to pre-pandemic levels. The estimation is sooner than previously thought, with the easing of housing loan regulations and the country’s reopening speeding up the recovery. Last month, the central bank relaxed mortage regulations to help revive the property sector, which accounts for 10% of the country’s GDP, while employing 2.8 million people. The sector was initially forecasted to return to normal in the years 2025 through 2027, but the Real Estate Information Centre acting chief, Vichai Viratkapan, says it could pick up sooner.
He also noted that newly-sold housing units will fall by 35% this year but will double next year in 2022. The central bank says that the new easing of mortgage regulations would help increase the amount of mortgages by 50 billion baht per year. But, Vichai says the easing won’t curb the banks’ worries about lending to home buyers during a weak economy. He cites the property sector as facing higher costs as well as a shortage of migrant workers due to the Covid-19 outbreak.“The easing of mortgages and the country’s reopening will make the real estate business active again.”
The government is planning to reopen borders to such migrant workers from neighbouring countries in the near future, but no date has been set. Thailand’s finance minister recently predicted that the economy would grow by 1% this year and 4% next year. Last year saw a 6.1% economic slump due to the pandemic.Real estate experts say the pandemic has accelerated a great disruption in Thailand’s property market that was supposed to take place over the next 5 to 10 years. However, experts say it will arrive sooner. According to managing director of Chon Buri-based property developer, Ratanakorn Asset Co., Jugkarut Ruangratanakorn, there are 10 disruptive trends that will challenge the market in next year and beyond.- Economic, national, social and population structure
Thailand’s GDP growth has been lower than its potential for the past several years because of its slowing population growth. With no new resources, no foreign direct investments, no 5.0 industry to help boost economic growth and no new economy, the results definitely show. Thailand’s society is also ageing, with a rising number of senior citizens, and a declining birth rate. As the average family size is decreasing, the marriage rate is lower, resulting in a large number of single people. This situation is resulting in a decreasing need to purchase a new home for a family. As the new generation prefers renting and moving to newer condos, the new trend is influencing the property market. - A higher debt burden and low education towards developing assets
Thai people are getting into debt faster and deeper at an increasingly younger age. Currently, the household debt ratio is 93%. And, most of that debt stems from consumption and education, not property or business ownership. Thus, those who have debts cannot build wealth, as they also don’t have any assets. Furthermore, many locals don’t understand how to create wealth. Instead, they want to live a fast lifestyle and spend most of their money on consumption. As the pandemic has inflated assets worldwide, many governments have used quantitative easing to support their economies. The downfall of this move, is that is doesn’t create a real sector, demand or productivity, but increases asset values. For younger generations, assets and property acquisition signifies a long-term burden. And, with the rise in stay-at-home working, the internet has spurred a mentality that working mobility and residential relocation is an easier way to live. Rising costs in living also makes it harder to save money to buy property. - Experience and lifestyle
The new generation is more focused on their present lifestyles and experiences, rather than permanently holding assets. In the future, 2 groups will emerge: those who understand wealth creation and will be payees, and those who understand lifestyles, who will be payers. But the ratio between the 2 is uneven, with most becoming payers and not payees. - Property ownership follows all other ‘wants’
Owning a house or property will follow consumption, lifestyle, health and wellness, travel, education, and entertainment. This is due to most people having the perception that owning a home is a lifetime debt with payments lasting over 30 years. - Renting replaces buying
Renting will replace buying due the trends in desiring a convenient lifestyle. The ability to move, paired with smaller family sizes is a large, contributing factor. And, such potential buyers don’t want a long-term burden to hamper their already sluggish income growth due to the ailing economy. - Building and land taxes
Building and land taxes will burden potential property owners as such extra fees will dampen their purchasing powers. Those who want to invest in a property in the long run will see that higher property costs equate to higher taxes. - Regulations in property development
Property development regulations will also increase the cost of development. This results in higher household debts against a sluggish economic, population, and purchasing power growth. And, such regulations becoming a burden are not showing any signs of easing. - Other financial innovations vs. property
Digital assets, cryptocurrency, tokenisation, real estate investments, mutual funds, the bond and equity markets are starting to trump the property market. With these financial innovations, property ownership is no longer being held by a single owner. Thus, future investments will be in the holding of a unit trust, not an individual right of ownership. Those who have caught on to this trend will be defining the next era of property. - Location, location, location is no longer the answer
Despite having a great location, a project can still fail due to its price, product, design, and inability to meet consumer needs. Market trends and consumer behaviours are rapidly changing as each generation features different property purchasing preferences. And, the very definition of a ‘good location’ is constantly being redefined. - Sharing property
Co-working, co-living, multipurpose, timeshare and exchange programmes are defining the new area of property ownership. Now, these trends will yield more sharing choices for consumers instead of just owning a property alone.
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- Economic, national, social and population structure
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Demand for residential property returns to Phuket
After the Phuket Sandbox programmehas seen 4 months since its commencement, it seems to have brought some life back to the island after almost 2 years of a stagnated economy. The Tourism Authority of Thailand says a total of 59,689 international tourists have visited the Andaman Sea vacation island under the Sandbox programme from July 1 to October 30. Although the number is not near as high as what was expected, it is still signalling a ray of hope in reopening the country in time for the high season. And, the residential property market has shown more activity as well. Prakaipeth Meechoosarn, Head of Phuket Property Sales, CBRE Thailand says the Sandbox programme has shown to be a positive move towards reopening.
As the Phuket residential market was onced perceived as a market for foreign buyers, its face is now changing to cater towards a broader range of expats and local residents. Prakaipeth says CBRE has seen a wider range of products being offered as a result of the wider targetted market. Due to Covid-19, the market seems to have been reset to become more of a buyer’s market with more options for negotiating and opportunities.“The overall Phuket residential market saw a positive movement after the “reopening” under the Phuket Sandbox scheme. During the lockdown period, most of our inquiries have been from local buyers who are looking for vacation or second-home properties. After the sandbox model was opened, the inquiries expanded to foreign residents, expatriates and some international tourists, which has led us to believe the scheme has helped bring back returning clients who have had their eyes on properties for the past years but they could not travel due to border restrictions. However, investors have yet to fully return due to uncertainties over the global economic outlook and the rental market.”
Some developers have even been waiting to clear their unsold property supply in the island, making it clear that the buyer’s market will continue to soar until the supply demand balance becomes more stable. The ultra-luxury market has seen activity in both its resale and the number of remaining units from developers as there have been limited launches due to the scarcity of prime beachfront lands that boast a spectacular sea view.
Now, Prakaipeth says the company has seen a trend of buyers being interested in ready-to-move-in properties as it makes them feel more secure seeing their potential property already completed. And, those buyers are also moving towards using such properties as safe havens during the Covid epidemic. Now, with the hybrid work model making it easier to move between city and beach life, vacation homes are rising in demand. Such modern properties with a sea view and/or beachfront are the most sought-after by present buyers.
But, the Phuket residential supply is low despite increasing demand. As only a few new projects were launched in the past 2 years due to the pandemic, the effects are visible. CBRE cites its own research as concluding that the total number of newly-launched units for condominiums and villas has decreased by 98% year on year in 2020 and 34% in H1 in 2021. Demand for some premium projects in Phuket’s prime locations is still there, which has resulted in developers deciding not to give significant Covid discounts. This situation is one reason why ultra-luxury prices have recovered fast, after falling initially in the early stages of the pandemic.
CBRE, along with other sectors, expects to see more international arrivals to Phuket as travel restrictions are eased. The end result being that more tourists and investors will consider getting vacation or holiday homes on the island. However, as new variants arise, such as the Omicron variant, the future is still not clear as to how fast the property market and other sectors will recover. So far, although the newest variant is showing a high amount of mutations, many countries are swiftly closing borders in an attempt to control the variant’s spread.
In recent days, Thailand has seen the new variant confirmed with the first case being that of an American man, who had arrived from Spain. 2 more cases were recently confirmed and were that of Thai women who returned from Nigeria. A Thai man who worked for the UN and had just returned from the Democratic Republic of Congo is the latest person to be suspected of being infected with the Omicron variant according to the director-general of Thailand’s Department of Medical Sciences.Comment
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Chinese buyers dominated Thailand real estate market in 2021
The acting director of the Real Estate Information Centre (REIC), Wichai Wirattaphan, has stated that Chinese nationals accounted for nearly 60 percent of condominium purchases in Thailand in the first nine months of 2021. The statistics released by the REIC show that foreigners from the following five nations were the top investors of properties in Thailand: China, Vanuatu, United States, United Kingdom, France. In that order.
Wirattaphan claimed that although Vanuatu nationals only purchased 23 units, they created a significant effect in the real estate market since each property was valued at an average of 44 million THB, accounting for 3.4 percent of the market, second behind Chinese buyers.
Overall, Singaporeans bought more expensive units at an average of 5 million THB per unit, while Americans bought the largest units, averaging 54.8 square metres, according to the data.
The average size of apartments bought in the first nine months of 2021 was 43 square metres, at an average price of 4.9 million THB or 114 thousand THB per square metre.
In Bangkok, foreigners purchased 3,246 units or 53 percent of those on the market, coming in at a total of 21.76 billion THB. Chonburi came second with 1,738 units or 28.4 percent and 4.14 billion THB, respectively.
The following are the top five provinces with the most foreign buyers: Bangkok, Chonburi, Phuket, Prachuap Khiri Khan, Nonthaburi.Comment
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Thailand real estate prices expected to rise in 2022
Since the first quarter of 2020, the home price index has been declining while new home prices have increased. Several pandemic-related factors are to blame, including an increase in the costs of fuel and construction materials, along with higher inflation and a labour shortage. The compounding of these pressures mean real estate prices in Thailand are ready to rise in 2022.
Following the resumption of global economic activity, the prices of several key construction materials like steel and cement increased, while fuel prices increased by 50%, the Bangkok Post reported. In 2021, the price index for construction materials increased by 8% from 2020 – the highest jump since 2008.
Due to the significant price increases, developers will find it difficult to finish their projects and deliver pre-bought units to their customer at the contractual prices, Landy Home’s Director of Construction Phanid Maneerattanaporn told the Bangkok Post.
But the cost of construction materials aren’t the only part of the supply chain that have taken a hit during the prolonged pandemic.“It will be a challenging year for homebuilders as the demand side is strong but the supply side or construction costs is worrying. We need to manage costs the best to finish the units at the price we agreed with customers earlier.”
The chairman of the property development company Supalai has echoed similar concerns.“Many exported materials are obstructed by shipping delays or supply shortages, resulting in a domino effect.”
In December last year the Bureau of Trade and Economic Indices reported that the costs of iron and steel products had increased by 28.7%, followed by concrete (5.6%), aluminium, asphalt, and sand (4.2%), electricity and water supply equipment (3.8%), and cement (3%).“The costs of housing development, excluding land costs, will likely increase by 3-4% this year. … When combined with higher labour wages and fuel prices, housing prices will be 2% higher.”Comment
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Thailand homebuilder Seacon aims for 28% sales growth in 2022
Thailand homebuilder Seacon Company Limited announced it expects a 28% increase in profits for 2022, hoping to make a staggering 2.4 billion baht in sales, as it prioritises luxury and high end properties. The ambitious sales target comes as Thailand’s first homebuilder company celebrates its 60th anniversary this year.
Last year Thailand’s homebuilding business significantly improved with a market value of 20 billion baht, a 67% increase from 12 billion bath in 2020, compared to 2.5 billion in 2019, said Seacon Managing Director Manu Trakulwattanakit.
Nearly 2 billion of Seacon’s estimated 2.4 billion baht in sales are projected to come from Seacon directly, with another 500 million coming from Seacon ID, a homebuilding company established last year to target self-build house customers with their own concepts. Seacon’s sales target for the year are more than 1 Billion THB more than its 1.3 target for 2017, which shows just how confident the company has become despite two years of a pandemic economy.
In 2021, Seacon racked up 1.88 Billion THB in sales, a 41% increase compared to 1.33 billion baht in 2020. Seacon ID added an extra of 180 million baht to the company’s revenue, with the majority of sales coming from high-end units costing more than 20 Million THB“Key engines this year remain the upper-end segment, meaning units priced more than 7 million baht. Last year, this segment saw growth of more than 85% from 2020. … Demand from those who want a self-built home in their own style is on the rise.”
The majority of the sales (55%) last year came from large houses with an area of 351 square metres or larger. Medium housing (35%) came in second with an area of 200-300 square metres, while smaller units of 200-350 square metres accounted for 13% of total sales.Comment
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Thailand real estate to remain depressed until 2024, despite developers’ strong predictions
Despite big plans and strong earnings predictions from local real estate developers, Thailand’s real estate market might not even return to pre-pandemic levels until 2024, according to the Government Housing Bank.
Factors cited include a slow economic recovery, inflation, and a new variant of the coronavirus, Omicron.
The research centre predicted in November that the real estate market will recover by 2023, after relaxing the mortgage regulations to restore a vital sector that accounts for approximately 10% of GDP and employs 2.8 million people.
The Covid-19 pandemic has limited domestic activities — which have continued to be suppressed since the Omicron strain appeared late last year, according to the Government Housing Bank’s Real Estate Information Centre.
Government policies and relaxed restrictions are set to encourage growth in a property market that has flattened out. The number of newly developed apartments and houses are likely to increase by 35% this year to 105,000 properties.
Meanwhile, inflation hit a nine month high of 3.23 % in January and demand from international customers is expected to remain low this year due to the pandemic.Comment
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Office and retail property predictions for Asia Pacific in 2022
CBRE, leading international property consultants, foresees a record year for Asia Pacific commercial real estate investment in 2022, driven by steady economic growth and pent-up investor demand, according to the company’s 2022 Asia Pacific Real Estate Market Outlook. CBRE expects total investment volume this year to grow by at least 5% to more than US$150 billion, surpassing the previous pre-pandemic high of US$142 billion in 2017. Strong investment activity from close-ended real estate funds, real estate investment trusts and institutional investors, including many that paused acquisitions at the onset of the pandemic in 2020—are expected to drive the recovery. It is estimated that institutions in the region have up to US$500 billion in equity on their balance sheets awaiting deployment. Greg Hyland, Head of Capital Markets for Asia Pacific at CBRE believes that logistics assets remain keenly sought after by investors in 2022.
Office“While demand for retail and hotel assets will experience some near-term impact from the emergence of the Omicron variant, these sectors will continue to attract interest from value investors who are positioning for a recovery.”
Most offices in Asia Pacific markets have reopened or are in the process of welcoming employees back to office-based working. The Omicron variant is unlikely to substantially derail the recovery of office demand as companies gain more confidence in the return to the office and hybrid working. Initial reactions from North Asian companies indicate that most will continue working at the office, albeit with limits on occupancy or team rotation. CBRE expects 2022’s office leasing activity as measured by net absorption to increase by up to 10% y-o-y on the back of a rebound in expansionary demand. Grade A office rents are set to grow around 1.0% in 2022, with Singapore leading the growth at more than 10%. Flight-to-quality relocations and newer, greener buildings are expected to help Asia Pacific’s office market recover from its longest downward rental cycle in 20 years.
Logistics
Asia Pacific’s industrial and logistics sector is likely to see another strong year, buoyed by a solid regional economic outlook and improved global trade. Logistics rents are expected to grow for a 12th consecutive year across all major markets, led by Hong Kong, which is expected to benefit from trade growth when borders with mainland China re-open, as well as reduced supply availability. Supply pressure is expected to be uneven across the rest of the region. Greater Tokyo and Guangzhou leading the pipeline of new supply reaching the market this year.
Retail
The emergence of the Omicron variant at the end of 2021 added fresh uncertainty to the retail market outlook. Prior to that, consumer footfall across the region had almost fully recovered to pre-pandemic levels, reflecting rising vaccination rates and easing restrictions on economic activity. CBRE retains its positive outlook for the asset class in 2022 as more markets return to growth, despite the delayed recovery of tourist-oriented retail. Regional retail rents are forecast to grow mildly with demand focused on good quality assets in prime locations in a tenant-favored market.
Robust Economy to Drive Commercial Real Estate Recovery
Asia Pacific economies achieved relative success in containing the Covid pandemic in 2021, having fully vaccinated more than half of their populations. While the emergence of the Omicron variant has introduced uncertainties, CBRE believes it will not derail Asia Pacific’s economic recovery in 2022. Dr. Henry Chin, Global Head of Investor Thought Leadership and Head of Research for Asia Pacific at CBRE says that they expect steady economic growth and low interest rates to support commercial real estate recovery across the region.
“Active asset management and enhancement with a focus on ESG and repositioning properties will be prominent themes for investors in 2022, fueled by narrowing prime yield spreads and an emphasis on rental income.”Comment
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AP to launch 5 condo projects for 13 billion baht in 2022, cites early presales gains
AP Thailand is planning to develop 5 apartment complexes at a projected cost of 13 billion baht in 2022, citing a significant increase in presales in Bangkok’s condo market in Q1 this year. The chief of the condominium business group says the condominium market in Bangkok has shown positive signs in the last six weeks, with AP registered 1.08 billion baht in presales from January 1 to February 15 for a 250% increase year on year.
The 5 new projects AP has planned for this year are 61% more than those planned last year. 3 of them are partnerships with Japanese developer Mitsubishi Estate Group. The total value of their sales is projected to be 10.4 Billion THB.“Mass market condo with prices of 2-3 million baht a unit is in high demand. To avoid mortgage lending rejection, we will work with financial partners to help pre-approve customers’ financial qualifications before the transfer period.”
In the first half of 2022, AP plans to debut 3 new condominium buildings in areas where it expects a lot of interest, including the Sukhumvit-Rama IV, Pin Klao-Arun Amarin and Ratchayothin areas, with selling prices beginning at 2 Million THB.
The real estate market in Thailand is projected to remain less competitive than pre-pandemic levels. AP expects 30-40% take up rate for low-rise buildings and 25% absorption for high-rise properties.
According to the Real Estate Information Center, the amount of new condominium units completed in Bangkok in 2021 and 2020 was 21,463 and 29,773 units, respectively — a significant drop from 54,769 in 2019 and 77,289 units, respectively, in 2018.Comment
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