Thailand Real Estate Market Outlook 2021

February 11, 2021

Although 2020 was undeniably a very difficult year for everyone, it also brought some great opportunities in the real estate market. On a global scale, the coronavirus pandemic has severely impacted (and continues to impact) various industries, such as the healthcare, education, food, and fitness industry, among many others. Citizens, in fear of the contagious virus, had no choice but to close shop suddenly and swiftly when the pandemic first hit in early 2020. At the same time, there are now some great property discounts available because of the coronavirus pandemic.

Nobody was prepared, and nobody was sure when things would let up. The healthcare industry was inundated with critically ill patients and a depleting workforce, while the food and service industry saw losses more than gains, with staff to pay but no customers to feed. Truly, 2020 was a bleak year, and nobody was spared.

This includes the real estate and housing industry – one of the many sectors of society that were gravely affected by the coronavirus pandemic. The outlook for 2020 was not very optimistic at the start of the year: tenants who were no longer employed could not keep up with rent. Meanwhile, unit owners struggled to pay association dues without any more tenants.

Many chose to return to their family homes or provinces, and no longer reside in condominiums in the city; this was so because many also lost their jobs in the central districts. Foreign tourists were also banned from entering Thailand in 2020, which also affected residential sales, investments, and rentals.

Overall, real estate was not so much of a priority in 2020 – resulting in a significant decrease in property growth, value of units, condominium sales, and ultimately, a sudden economic recession. This economic crisis also forced property developers to halt all projects for months until deemed safe – both physically and financially – to resume.

A snapshot at Thailand’s real estate outlook for 2021

However, as we enter 2021, market analysts and real estate experts are looking forward with hope and belief that the residential market is on track to improve. The real estate industry has been slowly picking itself up since late 2020, with its steady recovery slated for early 2021 onwards. Experts also expect a higher value and more supply in 2021, due to a slowly increasing demand in real estate, as things begin to normalize and people’s routines begin to stabilize as well.

Last year, Thailand’s real estate outlook saw a 46.6% decrease in new supply units, while housing estates contracted 34.7% and condominiums 59.2%. This year, experts say that supply units will increase by 11.9%, with the value of housing to go up 3.9%, after such a dip in 2020. Housing units would also rise up to 4.1% and condominiums would as well at 25.1%.

The housing market is expected to grow its unit sales by 6.3% with an added value of 4.8%, with the condominium market expected to grow to 16.5%. This is a modest increase considering that travel restrictions still abound.

According to the central bank of Thailand, the GDP (gross domestic product) prediction for 2020 is a 6.6% contraction this year and 3.2% growth. Overall, the property sector of society is expected to improve, considering all the factors involved that may not be in anyone’s control just yet.

Some of these factors include a recovery from the economic recession, continuous development of property infrastructure projects, and a proper adjustment between demand and supply, eventually. Superior aspects, according to analysts, are developers who will be developing mid to high-end, low-rise, properties with a lot of condominium backlogs for 2021. Low-end levels may still have to resort to significant price-cutting this year, to cater to their market.

However, analysts’ top picks include Thailand as one country that is expected to have a positive revenue exposure for the mid to high-end, low-rise properties, especially with its sizable backlog. The low-rise segment is also considered to stabilize this year, with a take-up rate of 14% in October.

Other experts also believe that supply and prices will hold on this year, considering favorable government initiatives in the property market; 2020 is expected to show a positive recovery, post-lockdown.

The real estate market’s supply index has shown to increase by 23% (up 385 points) in the latter half of 2020, which is only expected to grow even more coming into 2021. This is due to the excess supply of multiple properties on sale from the previous year. House prices are still reducing since 2019, with the Thailand Property Market Index showing a continuous decrease up to 9% compared to last year.

This, however, is good news for those wishing to buy properties and structures in 2021 - supply is abundant, but demand is not as rampant as the years pre-pandemic. So many units are in need to be sold, but luckily, housing prices are still on the reduction scale.

Thus, this has pushed real estate developers and sellers to offer their housing and condominium units at a still favorable price, with sizable discounts. 2021 is the year to purchase properties you’ve always had your eyes on, as purchasing them at this pandemic-friendly rate will still garner a higher value in time, for years on end.

Thailand’s many main cities each have their own real estate outlooks, but coming from Thailand’s general state, these cities are seeing positive recovery as well, depending ultimately on the specific factors each city possesses, and what exactly the customer needs or wants for their life (rest house, family home, vacation getaway).

Recovering from COVID-19’s dire effects in 2020 comes with a few benefits for those interested to buy (and sell) – one would be surprised to find out that Thailand offers an extensive range of COVID-19 property finds, from hillside sea-view villas, modern apartments, and even to luxury beachfront villas. It’s also the best time to scout for land investments, commercial properties, and foreign freehold condominiums.

Real Estate Outlook in the Different Cities of Thailand

As mentioned, every city in Thailand is different in its own way – its location, target market, residential environment, views, cost of living, developments, landscape, and even class and culture. That’s why it is very important for buyers to carefully select which area they plan to invest in and purchase from, since every area has its own set of pros and cons, as well as its own individual property outlook for 2021.

Are you looking for a modern bachelor’s pad, a holiday respite, or a spacious family home with a backyard? Are you planning to put up your own beach resort in the future, or are you just searching for a luxury retirement pad for yourself? These are questions you have to ask yourself first, to help tighten and refine your search. You may also need to determine if you are searching for someplace quiet, tucked away, or in the middle of the city bustle. Your personality matters, too!

Luckily, most main islands of Thailand already have their own reputation in terms of property image and their own real estate outlook. Here we see which areas of Thailand are best for you, depending on what you need.

Koh Samui Real Estate Market Outlook 2021

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Off to the southeast of the Gulf of Thailand, the island of Koh Samui boasts of the ideal getaway. With its coastline beaches and scenic views, this island is regarded as a favorite holiday destination for many. Coupled with its growing popularity, Koh Samui’s real estate has been booming. With prices seen to be going up dramatically in recent years, it has garnered a steady 5 to 10% year on year increase since 2016. The island has transformed into a popular choice for the affluent, gaining more reputation with luxury property developers as first-class restaurants and hotels started to sprout about.

Although tourism continues to be greatly impacted by the pandemic, the property market remains attractive as a long-term investment. Particular to Koh Samui, the tropical island is safeguarded by strict building codes and regulations. The likelihood of it turning into a densely populated tourist redzone is slim, ensuring the property is valued high through the years. With the property market in its infancy stages, Koh Samui foresees steady growth through 2021.

Bophut and Chaweng, being the more populated areas in the island, are at the center of the property market in Koh Samui. Think villas overlooking with great views overlooking the beach front. Property value is unparalleled, in comparison to properties appreciated similarly like Hong Kong or Beijing.

There is increase in demand for Virtual Viewings for Property Sales with overseas clients investing/purchasing properties virtually. Conrad Properties provide Virtual Viewings to clients and enable a smooth & secure process to help them purchase the property including advising and consulting.

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Chiang Mai Real Estate Market Outlook 2021

Chiang Mai is the third largest city in Thailand and is considered as one of the most livable cities in the world. This grew to be so when Thai buyers started to explore investment opportunities and second homes beyond the nation’s capital, which is Bangkok.

On the other hand, strong interest in the real estate market of Chiang Mai actually comes from its foreign investors – in particular, Chinese investors. The low cost of living compared to other major cities remains to be the biggest attraction, which correlates to the prices of real estate being offered in Chiang Mai.

Chiang Mai will see the highest jump of 12.8% this year after facing a downturn of 2.8% last year. With that, more investment opportunities are offered at a great discount now, before prices are seen to correct. With the prospect of a steady recovery through 2021, foreign demand will likely return and rebound when travel restrictions are lifted.

Koh Phangan Real Estate Market Outlook 2021

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When compared to the island of Samui, Koh Phangan offers the same unspoiled, white-sand beaches but the appeal comes from being the less tourist-centered of the two. Save for its Full Moon parties, the island is a quiet reprieve from the city most of the time.

While its opportunity for growth is tempered by it wanting to remain unchanged, this island has the potential to be an upmarket island. Real estate properties abound in the past few years, driven by the growing tourism. While that was thwarted by the pandemic, lower prices of properties and of land in Koh Phangan compared to Samui presents real opportunities of growth in both property development and in the real estate sector.

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Phuket Real Estate Market Outlook 2021

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Phuket is known for its rainforest islands, pristine beaches, and sprawling number of high-end resorts ready to accept the massive number of tourists. The island eventually presented an invitation to stay as interests grew from a one-week vacation to a grand purchase of a 2-bedroom second-home villa.

In Phuket, the prices of real estate are generally higher than most neighboring cities. That is because the country’s first and largest resort island happens to be one of the most mature resort property markets. This has allowed further development in terms of infrastructure, helping support the growth of the real estate market along with it.

However, when the pandemic hit, it halted international visitors and demand altogether. Until the travel limitations are eased up, property developers are now relying more heavily on the local market to stir activity. On the other hand, the attraction to foreign investors-owners is not lost completely, as it presents a renewed appeal to investors seeking it as a temporary refuge or a long-term pandemic getaway.

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Bangkok Real Estate Market Outlook 2021

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As Thailand’s center of trade exports and tourism, Bangkok took the hardest hit when 2020 rolled in. Within the real estate market, Bangkok property prices fell by 4.9% by the end of 2020, however, is projected to increase 7.4% towards the end of 2021. Bangkok, being a regional hub, continues to be sustained by the local markets and its economic activity compared to the outskirts.

Although the demand will remain in cities, more and more developers look to other ways to recuperate the costs of suspended sales activities, unsold stocks, halted development, or delays in the construction plans. This has prompted over 20% to 30% in discounts just to clear defaults and existing stocks. As a result, property development is likely to slow down within the next few years.

Discounts present investment opportunities for those who are in the capacity to wait until the market recovers to realize their investments.

Click here to browse Bangkok properties for sale

Pattaya Real Estate Market Outlook 2021

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Hailed as a tourist city, Pattaya was known for its nightlife beyond its beautiful coastline. But in 2020, a lot of the attractions had to close up shop after global travel restrictions were imposed. Since then, the real estate market in Pattaya has seen a decline in the number of developments launched during the year and will continue to experience slow activity. Demand dipped due to a lowered foreign demand and because of unsold units that were carried off into the next year.

According to analysts, we will probably see a great decline in Pattaya’s property market until the end of the year due to the economic downturn. Although the market will start to improve during the year, it will not return to normal levels until the next year.

Hua Hin Real Estate Market Outlook 2021

Hua Hin has the vibe of a laid-back sea-side refuge, but is also a very metropolitan village. Dissimilar to other cities within the Gulf of Thailand, and although a tourist location, Hua Hin draws in more locals than foreign tourists yearly. Although economic activity slowed down in 2020, the real estate market in Hua Hin saw a spur in the onslaught of buyers from its neighboring town of Bangkok, seeking a retirement/holiday home in the resort city.

Welcoming a wave of tourists as the restrictions eased up, Hua Hin is starting to bounce back from the effects of 2020; with most condominium developments on track to continue throughout the year.

Conclusion

Prior to the pandemic, crowds both foreign and local poured in from all cities and countries, raring to rent properties for vacation, or even find their new home in Thailand. One of Asia’s most popular tourist spots drew in a lot of foreign tourist and economic activity, which of course affected its real estate industry as well quite positively.

However, the COVID-19 pandemic affected Thailand’s heavily tourism-driven economy, and picking themselves up again has proven to be a challenge. Supply is no longer equal to demand, and a great number of real estate investors coming from overseas were suddenly depleted, even until now. And so, when demand dropped to unprecedented levels, real estate developers resorted to price-cutting to keep afloat. Consequently, the market will continue to remain weak until the outbreak is fully mitigated.

However, the country – which is so rich in history and progress – continues to present very attractive investment opportunities, especially when it comes to real estate. Although the response is varied depending on the type of property and its location, the general outlook is still more favorable than it was in 2020, and buyers are now more motivated to start purchasing investment opportunities, with employment opportunities slowly picking up as well.

From the year before, low and medium-priced properties and condominiums have seen an oversupply and with demand kept low, it drove prices down to the benefit of first-time homeowners as well as investors. 2021 presents the opportunity to start investing for those looking for capital gains. For luxury properties, these continue to attract foreign investment. With foreign policies allowing for leasehold agreements, these are gaining appeal to more investors abroad as a well-founded long-term investment.

Are you looking for properties in Thailand? If yes, visit Conrad Properties, the leading British property agency in Thailand, based in Koh Samui.