The start of 2021 started with a glimmer of optimism, with the Capital’s real estate professionals hoping that the uncertainty and havoc created by the outbreak of COVID-19 in 2020, would be a distant memory we could all forget!
… Time flies and half the year has flown by in the blink of an eye!
Unfortunately, Thailand is now facing a 3rd Wave of COVID-19, “tight restrictions” and a high rate of infections are hampering a much-needed economic recovery. Once again, Bangkok’s real estate market has been plunged into limbo, with the industry facing uncertain and challenging conditions.
With half the year now completed, 5 BIG TRENDS have started to emerge in Bangkok’s Real Estate Market:
1. Central Bangkok Rentals Under Pressure
Bangkok’s local economy has always been tourism reliant and the huge decline in global travelers and tourists since the past year has adversely affected the Capital. This has had a direct and indirect impact on local employment; with the transient population of expat residents at a low compared to 2018/19.
This has had a knock-on effect on Central Bangkok’s rental market, which has traditionally been a foreigner-led market. Bangkok’s downtown luxury condos that previously had no issues finding tenants are currently looking pricey in a period where most households are looking to save on expenses.
The economic uncertainty combined with a reduced expat rental demand, is putting downward pressure on rental prices. This has forced landlords to re-evaluate their rental rates causing a big price readjustment across several neighborhoods and projects in the Central Business District.
2. Reduced New Condo Launches
2021 has been a subdued year for new condo launches with no major flagship projects launched in Central Bangkok by the Capital’s leading developers. Most of the established developers notably AP(Thai), Ananda and Sansiri have instead chosen to clear their existing stock of previously launched or newly-completed projects.
This cautious approach is not surprising, foreign demand from major international markets such as China and Hong Kong have still not recovered to the previous highs of 2018-19. As for the Thai market, buyers seem to have temporarily shifted their focus away from downtown condominiums.
3. Developers Shifting their Focus to Low-Rise Housing
The Thai market’s enthusiasm for condos has temporarily cooled; with many local homebuyers instead opting for new housing developments with large interiors and outdoor space, usually located in Outer Bangkok.
This trend combined with the tough economic conditions brought about by the pandemic, has forced developers to refocus their development pipeline. This year several listed developers have announced they will instead focus on the launch of low-rise house and townhouse projects.
4. Thai Buyers Grabbing Resale Opportunities
In the same way rental rates have declined, the resale market has also experienced a correction in the past year. The once lofty expectations of sellers on the secondary condo market has become more realistic and in line with the current conditions. This downward shift in prices has caught the attention of Thai bargain hunters, investors and especially homebuyers.
Traditionally Thai buyers have always had a preference for new projects, with resale condos being a less popular option. However, the adjustment in selling prices has encouraged Thai buyers to re-evaluate their perceptions. With many buyers currently finding attractive buying opportunities in good quality projects and desirable downtown locations.
5. Hoping for a Recovery in 2022
With half the year already completed, it seems an immediate recovery for the Capital’s real estate market looks increasingly unlikely. Most large developers are buckling up for a long and bumpy road ahead and conditions are likely to remain the same until at least Q1 of 2022.
On the bright side, things are gradually improving with the country’s vaccination program finally underway and the tentative reopening of Thailand to foreign tourists in Q3/Q4 of this year. These positive factors will hopefully bring much needed relief and help reinvigorate the market.
What’s Next for Investors, Developers and Real Estate Agents?
As a Real Estate Agency Fresh Property’s business has been incredibly affected by the current situation; the company has experienced a big drop in inquiry levels, new client registrations and volume of completed rental/ sales deals. Despite this, our company believes it is important to take some perspective on the current situation…
As the saying goes “buy on the sound of cannons, sell on the sound of trumpets”; investors should take note of the fact that Bangkok’s real estate market is offering appealing investment opportunities. Real estate is all about “buying low, selling high” and the current market correction is currently offering potential investors an attractive entry point.
The road ahead will most probably be a bumpy marathon for both developers and real estate agencies. However, the serious players in the industry have always understood that real estate is cyclical in nature and affected by the “roller coaster” of economic cycles.
While the boom times are always more fun, this lull in residential activity is giving Bangkok’s property market some time to breathe and stabilize, after over 5 years of uninterrupted growth.
Fresh Property firmly believes that there is opportunity in chaos, the companies and investors that are able to adapt to the “new normal” and survive will be the big winners in the long run.
Let us all hope for a speedy recovery!