Real estate markets all over the world experience a turbulent period and it’s difficult to say what the end result will be in the coming months. It mainly comes down to how long lockdowns will be in place and for how long countries will keep their borders closed.
The Thai property market started to slow down in 2019 and the market was predicted to continue on that track even before the COVID-19 crisis started. Many homeowners will face challenges, at the same time as novice investors will look for discounted property.
To keep you updated about the real estate market in Thailand during these uncertain times, we’ve written this article and where we will share updates weekly.
Thailand only had 3 new cases on May 21st, bringing the total number of affected to 3,037. The death toll remains at 56.
Yet, on May 18th, the Civil Aviation Authority of Thailand (CAAT) extended the ban on Incoming International Flights Until June 30th.
Thai Airways suffer hard and the government will reduce holdings in the airline and petition for restructuring through the bankruptcy court.
On May 13th, the government reported no new corona cases in Thailand. On May 14th, the country recorded one new case.
Emergency Decree remains until May 31st. This means that unless you meet certain criteria, you’ll be denied to enter Thailand as a foreigner.
Thailand saw 3 new coronavirus cases and a total of 2,992 as of 2020-05-07, according to senior officials.
The country has started to gradually lift restrictions as of Sunday, May 3rd. People are visiting parks, get haircuts at salons, and dine out for the first time in more than a month.
Thailand’s Property Market in the Past Years
Increasingly more foreigners, particularly from mainland China and Hong Kong, have entered the Thai property market during the last decade. The real estate market has grown slowly but consistently, breaking new record-levels in Bangkok.
Prices for property in the central areas not rarely reach THB 200,000 – 300,000, and sometimes even up to THB 500,000.
In the second quarter of 2018, almost 90,000 foreigners applied for work permits in Bangkok. To compare, around 78,000 foreigners applied for work permits in the first quarter of 2015, equal to 40,000 foreigners annually.
Worth having in mind is that the property markets behave differently in cities. For example, Chiang Mai and Bangkok have seen high growths, at the same time, Hua Hin, Cha-Am, Pranburi, and Khao Yai have experienced lower growths.
The Thai economy tumbled through 2018 and 2019 due to tighter lending policies, added supply, and a more volatile political climate. In 2018, as many as 65,000 units were launched in Bangkok alone, an increase of 11% since the year before.
How has Thailand responded to the COVID-19 outbreak?
The coronavirus disease has continued since January 13 when the first case outside of China was detected in Bangkok. We saw a sharp increase in cases from mid-March, mainly due to a Muay Thai fight at the Lumpinee Boxing Stadium on 6 March.
The cases increased by a hundred a day, a reason why the Prime Minister declared a state of emergency on March 26th. Later, a curfew was issued and effective on April 3rd.
On the contrary to Vietnam, which had only experienced around 300 cases and 0 deaths as of April 23rd, Thailand had around 3,000 confirmed cases and dozens of deaths as of the same date.
Thailand implemented the same measures and foreigners were restricted from entering the country and later to do transits.
Thailand’s Property Market Since the COVID-19 Pandemic Started
The Bank of Thailand has predicted that the Thai economy will shrink as much as -5.3% in 2020 due to the coronavirus. At the same time, Singapore estimates that its economy will shrink by -8.5%, according to local experts.
In Vietnam, they claim that the economic growth will reach around 4.8%, something I believe is unlikely when listening to predictions in other countries.
The Thai property market has, by no doubt, been affected badly by the COVID-19 outbreak, developers are some of the hardest hit. Consultants at CBRE Thailand even claim that the crisis will “create another split in our historical timeline – pre and post COVID-19” in Thailand.
Thailand relies heavily on investors from mainland China and Hong Kong, but they are now putting purchases on hold, something that has left Thai developers in a somewhat difficult situation.
We see a significantly reduced supply at the same time as developers try to sell existing units in stock at discounted prices.
Foreign owners look for quick exits
Local agents have noticed that foreign investors and landlords of both off-plan and established units have started to look for quick exits. We see an increased amount of properties up for sales and owners are prepared to lose money.
With that said, many Thai sellers seem to be more resilient and prefer to wait and hold, until the market improves. Not surprisingly, we also see an increased interest from liquid investors who look for bargains in the Thai property market.
They are typically:
- Local Thai cash buyers
- Aged 35-50
- Experienced investors
- Seek high rental yields
The seller profiles, on the other hand, are a bit different:
- Secondary market sellers
- Off-plan buyers (foreigners)
We will continue and update the article every week basis to keep you up-to-date with the latest information.