Thailand's Real Estate 2023 Market Update: Trends and Forecast for Property Investors

July 23, 2023

Across all sectors and in virtually every economy in the world, the COVID-19 pandemic has affected us all.

Nevertheless, the Thailand real estate market persevered and has done relatively well for itself even with the pandemic's global impact. It has relatively come back to normal economy-wise for quite some time.

In fact, Koh Samui saw substantial transactions due to great deals and rising value, thanks to government development. As the pandemic comes to a close in 2023, the future of Thailand's real estate market looks even brighter than before.

Real Estate Trends to Watch Out for in 2023

There are several key trends to watch out for in 2023 in light of the positive economic and real estate outlook of the recovering Thai real estate industry.

Although domestic buyers might still get held back by various economic challenges, these trends should also help them ride the wave towards prosperity in the 2020s.

These key trends specifically affect Thailand's residential, hotel, office, logistics, industrial, and retail sectors.

Here's the deal so far:

• Developers are mostly focusing on the launch of new low-rise housing projects.

• They're still focused on domestic end user demand despite foreign investor interest in condo registration.

• They're prioritizing inventory clearance over launching new downtown condominiums due to the continuing condominium inventory surplus.

All the same, real estate buyers and sellers worldwide and domestically can expect property value growth with the support of government policies and many other factors.

In particular, the residential segment is showing immense growth.

How Growth in the Residential Sector Could Boost the Market

Thailand's GDP is expected to get a nice boost of $30 billion due to its government's recent policies of enticing highly skilled foreigners to live and work in Thailand as expatriates.

Also, because of the pandemic's side effect of forcing people to stay at home and cut down on their social encounters, condominium investments are down but villa investments are on the rise.

Domestic and foreign investors should look into investing in villas more instead of condos (which currently has had an inventory surplus in the last few years).

Government incentives and post-pandemic circumstances should lead to more buyers of real estate—such as luxury villas for sale in Koh Samui, Thailand—in the coming years.

The Bank of Thailand also relayed that the average price of single-detached homes in Thailand went up by 1.2 percent in May 2021, a significant decrease from 2020's 5.9 percent growth and the lowest increase since August of 2017.

Inflation-adjusted prices also dropped by 1.2 percent as well. However, the low interest rates have assisted the low-income and mid-income detached home industry regardless.

Chinese citizens from Mainland China and Hong Kong comprise nearly half of the international demand for residential condominiums in Thailand.

Big foreign investors in the Thailand real estate market include citizens from the U.S., U.K., Japan, Taiwan, and Singapore.

Thailand Real Estate Industry 2023 Overview

2023 has started with "more optimism" from investors compared to the previous years of COVID restrictions according to Ms. Roongrat Veeraparkkaroon, the Managing Director of CBRE Thailand International Real Estate Consulting Firm.

This is supported by significant and promising trends from the fourth quarter of 2022. Corporate and individual clients have more confidence in the prospects of the year, particularly in terms of real estate.

• Competitive Yet Fragmented: The real estate market of Thailand is highly competitive though fragmented at the moment, with it facing both international and local players vying for a piece of the market pie.

• The Major Emerging Players: Some of Thailand's major players operating in the real estate sector include Ananda Development, Pruksa Real Estate, Sansiri, LPN Development, and Supalai.

• Most Developers Have Gone Digital: The country's property developers are presently utilizing digital tech and online marketing to boost their residential sales and tap into both global and domestic demand.

• Price Index vs. Supply Index: Even though Thailand had eased COVID-19 restrictions since the third quarter of 2021, the price index for residential properties have gone down while the supply index has risen steadily.

• The People Have Adjusted: The past few years of the pandemic have helped citizens acclimatize to the "new normal". They now have a clearer understanding of how they'll manage their work and home life.

• Stakeholders Have Also Adjusted: Stakeholders have taken more time to comprehend emerging commercial and residential real estate trends in Thailand. They should now apply the appropriate policies and strategies for the rest of the year.

• More Confidence in Knowing What Clients Want: Investors and developers alike also have more confidence that their projects can address the needs of their clientele better, hence more focus on villas and clearing their existing inventory.

Bangkok Office Supplies and the Substantial Condominium Inventory

In the first quarter of 2022, Bangkok's office space supply went up to 5.56 million square meters as a new structure with 25 square meters of leasable area was finished.

Even though developers postponed project launches, resulting in delayed consumer sales, the supply index nevertheless rose up. However, their inventory remains substantial, specifically when it comes to condominiums.

The prolonged economic slump must've manifested in the condos having such a low absorption rate.

The local buyers feared the economic uncertainty, resulting in them delaying their purchase of real estate.

Thailand Real Estate and Economic Market Analysis 2023

The Thailand real estate market has an estimated size of $51.44 billion in 2023. It's predicted to reach all the way to $65.67 billion in value in 2028, with a CAGR growth of 5 percent during the projected period.

Indeed, Thailand is fast-becoming internationally renowned due to its variety of options for realty and business investment.

• Thailand's Worldwide Investors: The Land of Smiles attracts investors worldwide because its various markets and industries have all sorts of potential for growth. Central Bangkok properties are expected to rise in value along with properties in other popular areas in Thailand.

• Rental Homes and Residential Property: Tourists have huge demand for rental homes in Thailand beaches and islands while long-term inhabitants tend to converge into metropolitan cities like Bangkok.

• High Demand for Island Life: There's high demand for luxury real estate among the Thai locals, foreign visitors, and expatriates for Property for Sale in Koh Samui and the like, resulting in higher rental rates. They view these islands as the perfect getaway destinations from city life.

• The State of the Retail Industry: Back in the first half of 2022, the ongoing pandemic resulted in a drop in the retail industry's value, particularly when it came to Thailand shopping centers or malls.

• Why Developers are Going Digital: Developers are using digital technology to tap into the next generation of purchasers who provide sales in digital currencies like crypto despite travel barriers, the Bitcoin crash, and the property market slump.

• Thailand's Low Cost Housing Scheme: The Thai Government also began the second part of their one-million-unit project for low-cost housing in April 2021. It has a budget of $923 million to $1.54 billion or ฿30 billion to ฿50 billion.

• The Second Phase of the Scheme: The second phase promises a lower interest rate and a housing unit ceiling price of $36,904 or ฿1.2 million, unlike before when it was valued at $30,753 or ฿1 million.

Thailand Real Estate Industry Segmentation

When we talk about real estate, we're referring to the land and any permanent structures or improvements related to the property, like a house or apartment building. The structures can be artificial or natural.

Furthermore, the real estate market of Thailand is sorted into different segments, whether it's by type or by major cities.

• By Type

• Office

• Retail

• Hospitality

• Residential

• Industrial and Logistics

• By Major Cities

• Phuket

• Pattaya

• Hua Hin

• Bangkok

• Chiang Mai

• The rest of Thailand

These are the industry segments we'll be looking at in order to properly evaluate the state of Thailand's real estate market in 2023.

Presently, foreign investors are buying up the condo inventory surplus while domestic buyers are still recovering from the economic slump.

Foreign buyers with their greater buying power are single-handedly lifting the business district markets of Bangkok or Chiang Mai. The rise of the Bangkok office space supply is also an investment worth looking into.

Domestic buyers, meanwhile, should check out villa and residential investments in places like Koh Samui and Phuket due to government incentives for them.

The Foreign Buyers' Return to Thailand’s Property Market

Forecasts regarding Thailand's real estate market show that although 2021 and 2022 condominium registration rates are down, certain sectors and segments are picking up the post-pandemic slack.

As a result, in the first and second quarters of 2023, the Thailand property market showed stronger signs of recovery with foreign investors and buyers driving up its growth.

This is in stark contrast to the market back during the pandemic, when it lacked overseas purchasers and investors.

• Foreign vs. Domestic: Foreign buyers are betting on Thailand's post-pandemic recovery when they buy up properties while their prices are still low due to pandemic-induced lower demand. Meanwhile, domestic buyers are still facing challenges in following suit.

• The Unfavorable Domestic Buyer Factors: Domestic buyers can't keep up with foreign buyers because their purchasing power hasn't recovered yet. The locals of post-pandemic Thailand are still dealing with inflation, rising interest rates on debts, and political reservations.

• The Favorable Foreign Buyer Factors: Foreign buying in Thailand has been bolstered by China's reopening and the increase of foreign purchasing power when their own countries recovered from COVID restrictions.

• A Reflection of Positive Recovery: There's a significant increase of condo transfers by foreigners after years of low condo registrations. This serves as the first true sign of life for the post-pandemic Thai real estate market.

• The Turnaround is Happening: There's a 79.2 increase of condo transfers by foreign investors in the first quarter of 2023 compared to the first quarter of 2022. It helps that foreign buyers have higher budgets compared to their domestic counterparts, allowing them to invest in the main business districts they favor.

• A Bigger Foreign Buyer Share: In 2023, it's predicted that Thailand property unit values will increase. Experts also predict that foreign investors will account for a significant percentage of the sold units in light of present trends.

Foreign Investors and Their Higher Budgets

Foreign investors prefer to live in the main business districts of Thailand as well as near the banks of Chao Phraya River. They're able to get their preferred business district condos due to their higher budgets compared to local Thai buyers.

It's been forecasted by the Agency for Real Estate Affairs (AREA) that foreign investors will contribute up to 10 percent of total units transferred or 15 percent of the total property value.

In the next two years—2024 and 2025—it's also expected for foreign buyer purchases to rise to about 18 percent of total units sold after years of COVID-Era stagnation.

The Government Housing Bank's Real Estate Information Center (REIC) says that condo transfers by foreign investors in Thailand have risen by 3,775 units or 79.2 percent during the first quarter of 2023 compared to the first quarter of 2022.

What's more, the value of such transfers rose by 67.6 percent. By the end of April 2023, the industry has gotten over ฿17.1 billion in transfers all-in-all.

Looking Back at the Thai Real Estate Market During COVID-19

The diminished home price value is due to a number of factors, which includes the stricter new LTV criteria that require larger deposits, the weaker economy that's still recovering from the pandemic restrictions, and the high amount of household debt.

• The Persistent Influence of COVID-19: You can really feel the influence of the pandemic from "symptoms" like the weaker purchasing power of domestic buyers compared to their foreign counterparts. Real estate prices have also stagnated to this day.

• Positive Price Index Trends: The price index dropped overall but it did show some growth. There were some positive trends for the landed residential properties price index, specifically for single-detached homes.

• The State of Home Prices: Nationwide home prices dropped by 1.48 percent in the first quarter of 2022 even though in 2021 there was a 0.37 percent gain. This performance was the weakest Thailand home prices had performed since the first quarter of 2017.

• Moderate Increase in Loans: The Bank of Thailand claimed property loans rose by 3.3 percent from year to year as of the first quarter of 2022. In turn, housing prices dropped by 2.4 percent every quarter until the first quarter of 2022 to $99.15 billion or ฿3.4 trillion. This followed the yearly 3.4 percent increases in 2021.

• Condominium Registration was Down: Residential development activities were hindered by COVID-19. The registrations for condominiums all over Thailand went down by 16.1 percent or 9,045 units in the first quarter of 2022 compared to the previous year.

• Registrations in Bangkok were Down: In the Bangkok Metropolis, during the first quarter of 2021, condo registrations also went down by 41 percent. From January to April 2021, the capital got 26,670 new dwelling units, reflecting a yearly decline of 18.1 percent.

• Yearly Drops and Slight Increases: Registrations were dropping yearly from 8.1 percent in 2020 to 41.8 percent in 2021. In contrast, there was a 3.4 percent year-over-year increase for condo registrations in the Bangkok Metropolis after it significantly dropped by 56.4 percent in 2021.

• Challenges in Residential Construction: Residential construction also became challenging throughout the pandemic. In the first quarter of 2021, nationwide condominium registrations plummeted to 17,618 units or by 33.6 percent compared to the first quarter of 2020.

• A Bigger Impact Than Anticipated: Thailand's real estate sector hasn't fully recovered in 2022 despite lifted pandemic restrictions because the ongoing economic decline caused by those very restrictions impacted the country much harder than anticipated.

These are the same issues that kept domestic buying power down. With that said, we at Conrad Properties did insist that the COVID Era was the best time to buy Thailand property (if you could).

The property sector is still hedging its bets for a turnaround in 2023, so this year is still the perfect opportunity for you to invest while property values are still low!

Find The Thailand Property of Your Dreams Today!

Rest assured that Thai real estate investments have huge upsides to them in the coming years. You too can indirectly own or rent in leasehold (according to foreigner land ownership laws) many Thai villas and condos in accessible, safe, and high-value areas.

When searching for your dream property as a foreign investor, retiree, spouse of a Thai national, or expatriate, you need to take note of your needs and preferences as well as what's available to you.

We at Conrad Properties can help you get villas or condos for sale all over Thailand, such as Villas for Sale in Koh Samui, Koh Phangan, Phuket, Bangkok, Surat Thani, Hua Hin, Chiang Mai, Pattaya, and many others.

Just get in touch with us today or browse our website now to start your search for the Thailand property of your dreams through Conrad Properties!