Property sector hopes for a turnaround in 2023
Thailand’s real estate sector did not fully recover in 2022 due mainly to the economic decline and the impacts of the Russia-Ukraine war as well as higher inflation and interest rates. But while the expected recovery did not happen, the overall outlook gives new hope for 2023.
The improved CCI (Consumer Confidence Index), which has continued to rise for six consecutive years, currently stands at 47.9, the highest in 20 years, signalling that consumers’ spending confidence is back. Another factor that has supported the property industry is the Bank of Thailand’s continued loan relaxation (Loan-to-Value: LTV), which is about to end. It has successfully encouraged customers with real demand to purchase property units.
Home-buyers prioritize location when it comes to making a decision, according to leading real estate website DDproperty. In DDproperty’s Thailand latest Consumer Sentiment Study, 53% of respondents said they look for a project with access to public transportation and 50% say that location is number one factor to decide whether to purchase or not. The study, which covered the period January to November 2022, reveals that surrounding provinces have beaten key tourism destinations in terms of preferred housing choices. Bangkok is still top of the list for home-buyers followed by Nonthaburi, Samui Prakan, Pathum Thani and Chon Buri respectively. Famous tourist spots such as Chiang Mai (6th), Prachuab Khiri Khan (7th) and Phuket (8th) didn’t make it into the top 5.
Here again, location and transportation play key roles in dictating the trend. The surrounding provinces have become more interesting for home buyers thanks to the planned and completed train links between the city of Bangkok and Greater Bangkok (Nonthaburi and Pathum Thani). For a particular location in Bangkok, it is even more obvious that transportation is a vital factor, which is why Suan Luang district on the city’s east side, is now the leading preferred location. The Yellow line (Lad Phrao-Samrong), which is almost complete and slated to open in mid-2023, will be a boon for those wanting to travel from Suan Luang into the city and to other areas. The district has already has the Airport Rail Link and the Eastern railway.
It is noticeable that the inner city is no longer among the top locations in Bangkok. The city has expanded and while there are properties for sale in the CBD area, the prices are not for the mass market, and certainly not affordable for the majority of new home buyers.
Following Suan Luang, the top locations seeing the most demand from home buyers are Bangchak in Bangna sub-district, Khlong Tan Nuea in Wattana district, Lad Phrao, Huay Kwang, Jompol in Chatuchak district, Hua Mark in Bang Kapi, and Din Daeng and Samsen Noi in Phya Thai district. Of these top locations, Khong Tan Nuea draws the most interest in the condominium category, while Bangchak, easily accessible by BTS Skytrain, is most coveted area for rental property. The area has also grown into a multinational community and although land prices have continuously increased, some condominiums and apartments for rent are still in the affordable range.
In 2022, the condominium was still the property most in demand with more than half of prospective buyers (55%), followed by single-detached houses (28%) and townhouses (17%). Forty-two percent of potential condo buyers want an apartment in a price range of 1-3 million baht while prospective home buyers are willing to cough up 10 million baht maximum for their future single detached houses. This shows that 42% of first-time home buyers look for an affordable entry price for their first houses while 36% of people who want to buy houses prefer a luxury choice and 20% want a relatively more affordable property in the range of between 3 and 5 million baht per unit. In terms of price, townhouses are on par with condominiums, with 48% of potential buyers willing to pay 1-3 million baht per unit. Potential renters, meanwhile, are looking for something in the 10,000-20,000 baht/month range.