Bangkok’s property market experienced a turbulent period. What started off as a benign cyclical slowdown beginning of 2020, it transformed into a time of distress for the property market due to the COVID-19 situation.
Thailand has successfully contained the spread of the coronavirus with positive net reductions in newly reported cases of infections, unfortunately the economy took a big hit as in many other countries.
Inbound flights were drastically reduced and there was a complete shutdown of malls, restaurants and other leisure venues. For the first time since the 2008 financial crisis, The Bank of Thailand said that in 2020 the Thai economy shrank 5.3%.
New projects and developers contingency plans
The hardest hit by the pandemic, have been Bangkok’s developers. Several have seen new sales and transfers grind to a halt.
The usually international buyers from Hong Kong and mainland China, two very important markets for Thai developers in recent years, are putting buying or transfer decisions on hold. This has led several developers to implement contingency plans to ride out the difficult times.
Many chose to scale back on their new launches and many have put their attention on clearing their unsold stock. With a focus on targeting local buyers, to try and plug the gap that was created by the pandemic.
Another trend is the shift by developers to diversify their sources of income. With some of them looking into recurring income business models such as serviced apartments or wellness centers.
Rentals – market uncertainty. Moving plans on hold
Landlords of rental condos have not been insulated from the slowdown.
Bangkok, especially neighborhoods in the Central Business District, are popular rental hubs for working professionals. This renter demographic is very transient and reliant on economic conditions.
The economic slowdown and the local/ global shutdown of borders spooked expat renters, with many on temporary short stay visas (I.e. Tourist Visas) preferring to return to their home countries.
Many tenants renegotiated their leases or chose to downsize.
Generally, the renters in the capital plagued by the uncertainty of how the situation will develop, are mostly putting their moving decisions on hold for the tie being. Although 2022 looks very optimistic as restrictions have been mostly eliminated.
Resales – foreign sell-off and local bargain hunters
The resellers are reviewing their sales prices downwards and are being more realistic with their expectations.
A particular trend, are foreign landlords of both completed and off-plan condos looking for a quick exit. Many of them are putting their properties up for sales and are prepared to take losses, offering large discounts on their properties to potential buyers. Ge
On the other hand, Thai sellers have been more resilient with most of them preferring to wait and hold.
Some wealthy investors, despite the uncertainty, are looking to “buy the dip” looking to profit from depressed property prices. Most of these investors tend to be experienced local buyers.
Recovery of the property market in the 2nd half of 2020 and through 2022
The market has been mostly peppered with negative sentiments. The editors felt it was important not to sugarcoat the market conditions because providing transparent information is our professional obligation.
With so much global uncertainty, it is difficult not to feel that Bangkok’s property market has “Hit” a low but it is recovering in a positive way.
Bangkok’s property professionals are hopeful that a rebound will happen and it started to happen in 2022.
Property professionals, landlords and investors should hold-on tight in these difficult and recovery times.
It is important to keep strong and stay positive.