Foreign buyers will fuel growth in Thailand’s property market during the second half of this year but domestic buyers have not fully regained their purchasing power due to unfavourable factors, real estate appraisal and consultancy agencies say.
Thailand’s economy has shown signs of improvement thanks to foreign purchasing power, particularly since China’s reopening, and the country’s tourism sector as well as selected businesses are experiencing a resurgence and growth. The Ministry of Finance’s Fiscal Policy Office predicts Thailand will welcome 29.5 million tourists in 2023, earning the country 1.3 trillion baht in revenue. However, rising interest rates, inflation and political uncertainties are still hindering growth in the property sector.
The Real Estate Information Center (REIC) of the Government Housing Bank reports that the number of condominium transfers by foreigners across the country increased by 79.2% to 3,775 units, while the value of these transfers rose by 67.6% in the first quarter of 2023 compared to the same period last year. Total transfers at the end of the first quarter were worth 17.1 billion baht. This reflects a positive recovery trend in the real estate market following the country’s reopening, allowing foreigners to travel and engage in property transactions and transfers in Thailand as before.
Artitaya Kasemlawan, head of resident sales for real estate service and investment firm CBRE (Thailand) said that 89% of customers last year through to the beginning of this year were Thai while the remaining 11% were foreigners – most of them from China, Hong Kong, Taiwan, Myanmar, Singapore, and Japan. The agency has witnessed a healthy growth in foreign buyers since the beginning of this year.
She added that foreign buyers in the condominium sector typically have higher budgets than Thai buyers of between 15 and 30 million baht per unit. “In Bangkok, they prefer to live in main business districts like Sathorn, Lumpini, and Sukhumvit as well as along the banks of the Chao Phraya River.”
Sopon Pornchockchai, president of the Agency for Real Estate Affairs (AREA), said that foreign buyers are expected to account for 15% of total property value or about 10% of total units transferred, and that foreigners’ purchases will increase to about 18% of total units sold in the next two years.
AREA forecasts that 111,273 property units will come onto the market this year, representing a 5.3% increase over last year. The value of property units in 2023 totals 478.61 billion baht, a 6% increase from 2022.
Sopon added that only 60% of total purchases are for actual residential purposes while 22% are speculative investments by Thai investors and the remaining 18% are purchases made by foreigners for both residential and investment purposes.
“If investments for speculation continue to rise and the proportion of genuine buyers decreases, it may eventually lead to market problems and a property slump,” he cautioned.
By Veena Thoopkrajae
