Thailand Property Market Outlook 2023

Thailand Proeprty Market Overview

Thailand’s real estate market is expected to grow in the second half of 2023.
The Price Index of single-detached houses increased 6% YoY
Demand Index increased by 58% vs. pre-pandemic
Overall, property prices are forecasted to remain the same in the second half of 2023.
Thailand is fast becoming the centre of attention when it comes to business globally.
Bangkok rental properties are in higher demand for tourists and long-term residents.
The Thai economy and the country’s infrastructure are still improving and development continues outside Bangkok.
Villas are still in demand as developers also look to build on bigger plots of land as people look for more room since the pandemic.

Read The New 2024 Market Update For Thailand.

Thailand Property Market Outlook 2024

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Let's take a look back at the 2022 Thai Property Market?

Thailand is fast becoming the centre of attention when it comes to business and property investments, Thailand offers a world of opportunities and this has interest from investors all over the world. If you are planning on investing in a luxury home of your own, then you will be able to find luxury homes at relatively affordable prices compared to the rest of the world.

As is to be expected, properties will be more expensive in central Bangkok and other in-demand locations. In cities like Bangkok, rental properties are in higher demand for tourists and long-term residents. The same higher property rental prices also go for islands like Koh Samui or Phuket with property in demand from local residents, overseas tourists, Thais, and Ex-Pats who want a luxury getaway from the mainland or big city life.

Despite high expectations for a recovery in 2022, the real estate prices have been declining since Q4 2019. According to the latest DDproperty Thailand Property Market Index – Powered by PropertyGuru DataSense, the Price Index in Bangkok saw a 1% quarter-on-quarter increase, reaching 82 points. However, it experienced a 3% year-on-year decrease and a significant 22% decline from Q3 2019, before the onset of the COVID-19 pandemic.

Looking ahead, real estate prices in 2023 are expected to rise due to inflation, higher minimum wages, and increased construction material costs. These factors are likely to contribute to an upward trend in the Price Index.

However, it is important to consider the impact of current world affairs and financial markets on future property purchases. Despite the anticipated increase in property prices, the global economic landscape and financial uncertainties could potentially slow down purchasing activities and affect buying power heading into 2024.

Thailand’s economy has been improving steadily, and it is expected to grow steadily in 2023. The key economic indicators that may impact the real estate market include the following:

GDP growth rate: The World Bank predicts that Thailand’s GDP will grow by 4.5% in 2023, which could lead to increased demand for real estate.
Inflation rate: The inflation rate in Thailand is expected to remain stable at around 1% in 2023, which is a positive sign for the real estate market.
Unemployment rate: As of 2021, the unemployment rate in Thailand was 1.8%, which is relatively low. However, the impact of COVID-19 on the job market could still have an effect on the real estate market in the coming years.

Indicator	2019	2020	2021	2022	Total % Change over Time	Avg % Change over Time
Population Growth	68.9M	68.4M	67.9M	66.2M	-1.7%	-0.2%
Job Growth	40.9M	40.9M	40.7	39.6M	8.7%	0.9%
Median Household Income	THB 288K	THB 300K	THB 315K	THB 330k	87.5%	7.9%
Median Home Values	THB 4.2M	THB 4.3M	THB 4.4M	THB4.5	41.9%	3.8%
Crime Rate	462	439	421	410	-7.7%	-0.8%

Sources:

Recent Economic Developments That May Impact The 2023 Thailand Real Estate Market Trends:

Thailand’s property market has been impacted by several unique challenges in recent years. One of the main challenges has been political instability, which has led to a lack of investor confidence and slowed down the growth of the market.

Additionally, the COVID-19 pandemic has negatively impacted the market, causing a slowdown in demand and a decrease in property prices. Furthermore, Thailand is facing challenges Furthermore, Thailand is facing challenges related to its infrastructure development. While there have been significant improvements in recent years, particularly in the areas of transportation and energy, there are still gaps that need to be addressed.

For example, many rural areas lack access to basic infrastructure such as roads and electricity, which can hinder economic development and limit the potential of the property market in these areas. Additionally, the country’s public transportation system still needs further improvement to alleviate congestion and make commuting more efficient.

The government’s investment in infrastructure projects. This includes the high-speed rail project and the expansion of Bangkok’s mass transit system, which could improve connectivity and increase property values in certain areas.
The government’s efforts to attract foreign investment and stimulate economic growth. This would subsequently lead to increased demand for commercial real estate.
The COVID-19 pandemic impacted the economy and job market for 2 years we have seen a significant increase in the market. The new potential for a slowdown in the Thai real estate market is the world economy and the potential for a big recession. The impact is unknown though this may lead to decreased demand for real estate. However, this will also lead to a rebound in the market eventually but till then there will be great property deals to be taken in 2023.

The Correlation Between The Thai Political Landscape and The Thailand Real Estate Market Outlook

The political landscape in Thailand has always played a crucial role in the real estate market, and this trend is expected to continue in 2023. The country has experienced political instability recently, with a military coup in 2014 followed by a general election in 2019. The current government is headed by Prime Minister Prayut Chan-o-cha, who is a former military leader.

However, the political situation in Thailand has been relatively stable in recent times, and this has had a positive impact on the Thai real estate sector. The government has also implemented various policies aimed at promoting foreign investment in the real estate sector. These policies include the relaxation of foreign ownership rules, the promotion of real estate investment trusts (REITs), and the development of special economic zones.

Despite these positive developments, the political situation in Thailand remains fluid, and any changes in the political landscape could impact the real estate market outlook for 2023. Additionally, there are concerns over the government’s handling of the COVID-19 pandemic, which could impact investor confidence and the real estate market in the short term.

The Correlation Between The Thai Political Landscape and The Thailand Real Estate Market Outlook

Why are property prices in Thailand increasing?

Thailand’s thriving economy and robust infrastructure development are paving the way for notable property price growth. Beyond the bustling city of Bangkok, there is a significant expansion of factories and warehouses in strategic locations near seaports, airports, and well-connected road and rail networks. This expansion, coupled with affordable labor costs, has attracted businesses seeking cost-effective manufacturing and operations compared to neighboring countries like China and Singapore. The availability of office spaces and supporting facilities further facilitates seamless business transactions.

While these developments offer promising prospects, it is important to consider factors that can influence property prices. Inflation plays a significant role, impacting the cost of materials, imports, exports, and labor. Additionally, rising energy prices indirectly affect property prices.

One area experiencing a notable upswing is the residential property market. Construction costs have been steadily increasing since the beginning of 2022, with the Price Index for standard house construction recording a remarkable 6.2% year-on-year growth in Q3 2022—the highest in the past 19 quarters.

Looking ahead, residential property prices are expected to continue their upward trajectory. New projects set to be launched in 2023 are projected to witness price increases of 5-10%. Conversely, the prices of ready-to-sell houses are anticipated to remain relatively stable, presenting an advantageous opportunity for owners of resale properties to capitalize on the current market conditions.

With the growing demand for housing and rising construction costs, it is essential for prospective buyers and investors to stay informed about the evolving landscape of property prices in Thailand. This upward trend in both emerging areas and the residential market underscores the importance of making informed decisions based on prevailing market conditions, ensuring favorable outcomes in real estate transactions.

Key Property Trends in Thailand for 2023

1. Residential Real Estate Market

The residential real estate market in Thailand has experienced steady growth in recent years. The following are key points to consider:

Overview: The demand for residential properties in Thailand has continued to grow, particularly in urban areas. Factors such as low-interest rates, strong economic growth, and increasing urbanization have contributed to the development of the residential real estate market.
Market Trends: Price fluctuations and inventory levels vary depending on the specific location and property type. While Bangkok and other major cities are experiencing high demand for condominiums, rural areas are seeing increased demand for single-family homes. Additionally, the COVID-19 pandemic has led to changes in consumer preferences, with more people looking for larger homes with outdoor spaces.
Key Factors: Changing demographics, urbanization, and government policies are key factors that may impact the residential real estate market in 2023. For example, the ageing population in Thailand may lead to increased demand for retirement communities and assisted living facilities. Additionally, the government’s policy to promote affordable housing may also impact the residential market.

2. Commercial Real Estate Market

The commercial real estate market in Thailand is also expected to experience significant growth in 2023. Here are some key points to consider:
Overview of the current state of the commercial real estate market in Thailand: The commercial real estate market in Thailand has been relatively stable, with steady demand and supply over the past few years. The market is comprised of several segments, including office space, retail space, and industrial space.
Market trends, such as demand and supply, vacancy rates, and rental rates: Demand for commercial real estate space in Thailand is expected to remain strong in 2023, particularly in the office and retail segments. While vacancy rates have remained relatively low, rental rates have increased over the past few years, particularly in prime locations such as Bangkok.

Key factors that may impact the commercial real estate market in 2023, such as the growth of e-commerce, changing consumer behavior, and government policies: The growth of e-commerce and changing consumer behavior are expected to continue to impact the commercial real estate market in Thailand in 2023.

Retailers are likely to focus more on creating experiential shopping experiences to attract customers, which could lead to an increase in demand for retail space. Additionally, government policies aimed at promoting foreign investment and economic growth may lead to increased demand for office and industrial space. However, the ongoing pandemic and potential geopolitical risks could also impact the market.

3. Industrial Real Estate Market

The industrial real estate market in Thailand has been experiencing steady growth over the past few years. The COVID-19 pandemic has accelerated the growth of the e-commerce industry, leading to increased demand for industrial space in Thailand. The market is also benefiting from the government’s Eastern Economic Corridor (EEC) project, which aims to develop the eastern region of Thailand into a hub for technology and manufacturing.

Industrial Market trends in Thailand:

Demand for industrial space is increasing, particularly in areas close to ports, airports, and highways.
Rental rates for industrial space have been on the rise due to the increasing demand and limited supply.
Occupancy rates remain high, with many companies opting to renew their leases rather than relocate due to the limited availability of suitable space.

Manufacturing and Logistics Trends That Contribute Positively to the Thai Property Market:

The growth of the manufacturing sector in Thailand is expected to continue, which will drive demand for industrial space.
The logistics and transportation industry is also growing, which will increase demand for warehouse and distribution space.
Government policies, such as the EEC project, are expected to create new industrial real estate development opportunities in Thailand.

Overall, the industrial real estate market in Thailand is expected to continue its growth trajectory in 2023, driven by the expansion of the manufacturing and logistics sectors, as well as government initiatives to support economic development. However, the limited availability of suitable space may pose a challenge for companies seeking to expand or relocate their operations in Thailand.

Higher Thai Home Loan Interest Rates

As the economy makes a recovery, it is important to consider the impact of increasing inflation rates. The Monetary Policy Committee is expected to gradually raise the policy interest rate from the current 1.25% per year to 2% per year. This adjustment will subsequently result in higher loan interest rates and deposit interest rates.

With each 1% rise in the policy interest rate, home loan installments are projected to increase by 7%. This translates to higher monthly payments or longer payback periods for borrowers. Furthermore, financial institutions may reduce or eliminate the fixed interest rate terms offered to consumers. In light of these changes, it is crucial for individuals to maintain financial discipline in the coming years.

To navigate the effects of higher home loan interest rates, it is advisable for prospective buyers and existing borrowers to carefully assess their financial capabilities and plan accordingly. Being proactive in managing finances can help mitigate the impact of rising interest rates and ensure greater stability in long-term repayments.

EV Charger to Become a Standard Feature in Every Project

The rising popularity of electric vehicles (EVs) has led to a growing demand for EV chargers in residential and commercial developments. To cater to consumers’ needs, developers are increasingly incorporating EV charging infrastructure into their projects.

This trend is supported by the findings of DDproperty’s Thailand Consumer Sentiment Study, which revealed that 67% of consumers desire greater availability of EV charging points in both public and private car parks. Additionally, 68% of respondents expressed a willingness to pay a premium for a property equipped with EV charging facilities.

Furthermore, the study highlighted that 43% of consumers are interested in purchasing homes with a net-zero feature. Net-zero homes aim to minimize greenhouse gas emissions, aligning with the growing awareness and preference for sustainable lifestyles among buyers.

Given these insights, the integration of EV chargers and sustainable features has become a

Should you buy or sell property in Thailand in 2023?

Opportunities and Considerations for Buyers

For potential buyers, it’s important to note that the prices of single-detached houses are expected to rise due to the growing demand for more spacious living arrangements. Additionally, single-detached houses located on the outskirts of Bangkok, particularly those near Skytrain stations, are likely to experience price increases. Being in close proximity to convenient transportation options makes these properties highly desirable.

Opportunities and Considerations for Sellers

Sellers should take advantage of the current market conditions, as property prices are on the rise. However, it is crucial to consider that consumers’ purchasing power may be lower. To attract potential buyers, sellers should emphasize the exceptional qualities of their properties and consider renovations that can cater to the demand for more spacious living spaces.

Opportunities and Considerations for Landlords

The expected increase in real estate prices may lead consumers to postpone buying a home, creating an opportunity for the rental market to thrive. Condominiums are particularly sought after by tenants due to their proximity to business centers and greater rental affordability compared to landed properties. Landlords can benefit from the higher demand for rentals, especially in locations near business centers and conveniently situated near Skytrain routes.

Opportunities and Considerations for Buyers

In summary, buyers should be prepared for increased prices in the single-detached housing market and consider properties near Skytrain stations for added convenience. Sellers can capitalize on rising property prices by highlighting the unique qualities of their properties and considering renovations for more spacious living spaces. Landlords can benefit from the growing rental market, particularly for condominiums located near business centers and accessible transportation routes.

Opportunities and Challenges for Housing Projects and The Commerical Property Sector

Thailand’s real estate market offers potential opportunities for investors in 2023, but there are also challenges to consider.

Opportunities:

Growing demand for residential real estate due to urbanization and changing demographics, especially in the major cities of Bangkok and Chiang Mai.
Favorable government policies aimed at attracting foreign investment, such as the Thailand Plus package, include incentives for investment in special economic zones and targeted industries.
Expansion of the industrial sector, driven by the government’s Eastern Economic Corridor project, aims to create a high-tech manufacturing and logistics hub in eastern Thailand.
Increasing demand for commercial real estate, particularly in the office and retail segments, due to the growth of e-commerce and changing consumer behavior.

Challenges:

Economic instability caused by the ongoing COVID-19 pandemic and other global uncertainties.
Regulatory hurdles, such as complex land ownership laws and restrictions on foreign ownership in certain segments.
Overcapacity in some segments, such as the high-end residential market in Bangkok.
Competition from other emerging markets in Southeast Asia, such as Vietnam and Indonesia.

Investors may want to carefully consider these opportunities and challenges when making investment decisions in the Thailand real estate market in 2023.

New Projects and Continued Growth in 2023 For Thailand And The Property Market

In summary, the article provides an overview of the Thailand real estate market outlook for 2023. The economic and political landscape in Thailand will play a crucial role in shaping the real estate market in the coming years.

The residential, commercial, and industrial real estate markets in Thailand have experienced different market trends, such as supply and demand, rental rates, and occupancy rates. Despite potential challenges such as regulatory hurdles and economic instability, the real estate market in Thailand presents attractive opportunities for investors.

Looking ahead to 2023, the Thailand real estate market is expected to continue growing, supported by government policies and ongoing urbanization. The residential market is projected to see steady demand, with a shift toward more affordable housing options.

The commercial market is expected to benefit from the growth of e-commerce and changing consumer behavior, while the industrial market is projected to grow as a result of the expansion of the manufacturing and logistics sectors.

Opinions from Other Experts S From CBRE Thailand

Roongrat Veeraparkkaroon of the CBRE 2023 Thailand Real Estate Market Outlook webinar that was held online recently piqued the interest of many foreigners that have been contemplating shifting to this country.

The entire seminar provided extremely valuable and multi-dimensional insights into the future of Thailand’s real estate market for the projection years of 2023 and beyond. This seminar had keynote speakers that were experts in their respective industries that gave detailed information with analysis and metrical data about many aspects of the real estate market in Thailand.

Some of the topics that were covered included provided point by point analysis of opportunities and challenges across various sectors. Some of the many sectors covered in this report included Residential, Resale, Overseas, Commerical Spaces, Retail, Industrial & Transport, Data Centers, The Hospitality Industry, and Capital Markets.

The Key Points of The 2023 CBRE Thailand Market Outlook Report:

Diversity in foreign buyers increases for the residential luxury housing market, and the popularity of luxury condos continues with upgrades in design and functionality.
An increase in demand for Flex office spaces and Turnkey solutions with an increasing number of companies seeking out high-quality office spaces
An increase in mid-retail centers around the country with equal importance of smaller stand-alone stores around the city.
The shift in travel and tourism trends helped repair the hospitality industry which led to sustainability in this sector.
Many growth industries showed an increased interest in relocating to Thailand and setting up businesses in the logistics and transport sectors.

Should You Invest in Thailand's Property Market in 2023?

In conclusion, there are positive signs of economic recovery and a rebound in the tourism industry, suggesting that the real estate market will bounce back from its previous slump in 2023. The market will see new supplies as developers and landed property owners begin reselling their properties to meet the demand from financially strong consumers and foreign investors.

However, it is important to acknowledge that 2023 will present challenges for buyers. Real estate prices and interest rates are expected to continue rising, and the relaxed Loan-to-Value (LTV) measures implemented by the Bank of Thailand, which benefited consumers, have come to an end. Additionally, new land appraisal prices are now in effect, necessitating financial stability and disciplined financial practices for those planning to purchase real estate in 2023.

Overall, while the real estate market shows signs of recovery, potential buyers need to be financially prepared and exercise financial discipline to navigate the challenges and make informed decisions in the evolving market conditions.