In the wake of a post-pandemic era, the economic landscape of 2023 looks incredibly promising, especially for the Thai real estate market. With the specter of Covid-19 receding into the past, businesses and individuals are now shifting their focus away from pandemic-related concerns.
Tourism, a significant driver of the Thai economy, has shown remarkable resilience. In 2022, Thailand welcomed over 11 million international visitors, and the Tourism Authority of Thailand has revised its 2023 forecast to an impressive 23 million, with even more ambitious projections of 30-35 million visitors for 2024. This surge in tourism is set to positively impact various industry sectors, including real estate
Backing this optimism is the Bank of Thailand's GDP growth forecast of 3.6% for 2023, signaling six consecutive periods of economic expansion. This upward trajectory, spurred by the resurgence of tourism, is bolstering consumer confidence and, in turn, the real estate market.
However, while the outlook is promising, some factors could pose challenges to this growth. The tightening of lending due to high household debt and rising interest rates may potentially restrain consumer spending. Moreover, construction costs for standard homes have seen a 5.6% year-on-year increase, driven by elevated material, energy, and labor expenses, as reported by the REIC in the fourth quarter of 2022.
Additionally, global geopolitical concerns, such as the Russia-Ukraine crisis and tensions between China and Taiwan, along with a decline in exports, are factors that could introduce uncertainties. The outcome of Thailand's general election in May 2023 is also being closely watched for its potential impact on the economic landscape.
Furthermore, with the new prime minister of Thailand now in office, it appears that the Thai government is moving towards opening up Thailand to make it more welcoming and friendlier to foreign investment. This change in leadership and policy direction could further enhance the prospects of the Thai real estate market in 2023 and beyond.
Real Estate Trends
In the post-pandemic era, the real estate market is experiencing a shift in consumer preferences. People now prioritize an improved work-life balance and prioritize health and well-being, altering their housing requirements accordingly.
Emerging trends suggest that domestic buyers are favoring low-rise buildings with fewer than eight floors, offering more spacious and adaptable living spaces. The rise of remote work and study, even if it's just a day or two a week, has made residential designs with home offices or spare rooms and buildings with co-working spaces highly sought after.
The pandemic has also prompted a surge in health-conscious living, with developers responding by incorporating various facilities for an active lifestyle in their projects. Furthermore, eco-conscious consumers are increasingly opting for green-certified housing to reduce their carbon footprint and save on energy costs, thus boosting the market value of such properties.
Downtown Condo Market
While new downtown condo launches slowed during 2020 and 2021, 2023 is witnessing a resurgence, with an estimated 7,000 new units expected to hit the market. However, these new launches are unlikely to be priced higher than existing inventory, as developers seek to clear older stock. This reflects a willingness to reduce profit margins to absorb increased development and construction costs.
In the resale market, older condos are gaining traction among owner-occupiers and investors due to their spacious layouts. Renovation and refurbishment projects offer increased flexibility for individuals and families.
Midtown and Suburban Condo Market
The midtown and suburban condo market, hit hard by the pandemic in 2020 and 2021, experienced a swift recovery in 2022. With nearly 50,000 new launches, it has nearly reached the benchmarks set in 2019. This resurgence is driven, in part, by more affordable pricing options for domestic buyers.
Developers in this segment are adopting imaginative designs that maximize space and functionality. Co-working spaces and shared recreational facilities such as fitness centers, swimming pools, saunas, rooftop spaces, and gardens are becoming standard features in these projects.
Low-Rise Housing Market
Unlike the condo market, the low-rise housing market has remained resilient. In 2022, new launches approached 35,000, nearly reaching 2018 levels. A significant transformation in this segment is the proliferation of luxury and super-luxury housing, with 2022 witnessing an unprecedented number of super-luxury launches.
Alternate Locations
Research conducted by Krunsgsri has identified a strong demand for high-rise condo housing in provinces heavily reliant on tourism, including Phuket, Chiang Mai, and Chonburi. Both foreigners and locals are increasingly considering these regions for their real estate investments.
In some of the more populous provinces, developers are responding to the demand for affordable condo projects, particularly in Khon Kaen and Rayong.
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