Buying property overseas is one of the biggest investments many foreigners make. Before you deep dive into a developing market, it’s important that you do thorough research, checking the market cycle, and how healthy the market is.
Thailand is inevitably one of the most popular countries when foreigners decide to buy property overseas. Therefore, I’ve written this article where I share my predictions for Thailand’s property market in 2019.
Topics covered in this article:
- Thailand’s property market in 2017 & 2018: A throwback
- Bangkok’s property market
- Pattaya’s property market
- Chiang Mai’s property market
- How will Thailand’s property market perform in 2019?
Thailand’s property market in 2017 & 2018: A throwback
Thailand’s property market has been in a slow but consistent upward trend for over a decade now. The main reason is the increasing number of foreigners that visit and live in Thailand.
Around 88,000 foreigners applied for work permits in Q2 2018 in Bangkok alone and the number continues to rise. To put it in some context, in Q1 2015, 78,000 foreigners applied for work permits. That’s an increase of 10,000 expats per quarter, or 40,000 yearly.
A better economic outlook, higher take-up and occupancy rates have resulted in this upward trend. Still, the market performance differs much between cities.
For example, Bangkok and Chiang Mai have experienced higher growths, while places like Cha Am, Hua Hin, Khao Yai, and Pranburi have experienced slower growths, or even stagnated.
While the number of condominiums and serviced apartments rise each year in cities like Bangkok and Chiang Mai, the occupancy rates and prices increase with a similar pace.
Bangkok’s property market
Even if the demand has shrunk in Bangkok the past couple of years, we’ve seen an increased number of condominiums. Below you can find data, giving you a better understanding about Bangkok’s property market at the moment:
- The number of newly launched condominiums has increased from 8000 to more than 15,000 per quarter in 2017 and 2018
- In 2009, the number of condominiums was less than 100,000 in Bangkok. By the start of 2018, the number reached 550,000 condominiums
- The average price of condominiums has doubled from 2004 – 2018, from around THB 60,000 to THB 120,000 per square meter
- The number of serviced apartments was less than 500 in Bangkok in 2001. In 2018, there were over 21,000 serviced apartments, this number will reach 25,000 by the end of 2021
Even with a sharp increase of residential units, including condominiums and serviced apartments, prices are rising due to the high demand, at least in Bangkok.
Serviced apartments gain popularity among expats, that had an occupancy rate of 82% in 2018.
According to a report covering the Bangkok condominium market by Knight Frank, the asking prices have declined a little in the central business district and neighbouring areas, while prices have increased sharply in suburban areas.
Thai Residential’s Award-Winning Phuket Property Guide
Notice: This is a sponsored listing
The team at Thai Residential has been together in Thailand for 20 years and is one of the go-to agencies in Phuket. The company has won a number of awards along the journey, including “Best Real Estate Investment Advisor for Asia 2019” from the UK’s Global Business Insights.
Thai Residential are also the producers of the highly acclaimed Phuket Property Guide, the first of its kind in Thailand.
During the last two decades, people have been actively deceived and sold into inadvisable and “borderline” arrangements. This guide was created with those prospective property owners in mind – foreign buyers who arrive in Thailand with little knowledge of the country, and less understanding of its property market.
Written in conjunction with two of Phuket’s most established and respected law firms, this comprehensive guide aims to forearm, educate and inform foreigners who are contemplating either a property investment or the purchase of a residential home in Phuket.
It explains the pros and cons, and points out some of the tricks and traps into which unsuspecting foreign buyers have fallen in the past. Anyone interested in buying a Phuket or Thailand property deserves honest, independent advice, and the Phuket Property Guide was written to provide exactly that.
Pattaya’s property market
Pattaya’s real estate market crashed a few years ago and hasn’t fully recovered.
There’s been a constant decline of new condominiums in Pattaya. The number of new units has decreased from over 10,000 units in the second half of 2012 to only around 1,000 new units in the second half of 2017. Still, prices increase by 3-5% a year, which is not bad.
One thing is certain: Foreigners and expats have a big impact on Thailand’s property market, especially in Pattaya.
Thus, cities like Pattaya and Phuket are more vulnerable to the economic climate in countries like China and Russia. Hua Hin and Bangkok, on the other hand, attract buyers from a wide range of countries, and also wealthy Thai investors.
Some newspapers and analysts claim that the Thai market is oversupplied, but there’s no major signs that the market will crash within the nearest time.
Chiang Mai’s property market
Other cities follow Bangkok’s path where we see a constant rise in both supply and demand. Chiang Mai is a good example that has experienced a similar trend.
The number of newly built condominium units increased from 15,000 in 2012 to 32,000 in 2018 in Chiang Mai. The price increase was as high as 5% on average in the first five months of 2018 compared to 2017. At the same time, we saw a sharp increase of new residential units.
How will Thailand’s property market perform in 2019?
According to the IMF (International Monetary Fund), the Thai economy is expected to grow in 2019, mainly due to increased tourism and exports.
The number of expats applying for work permits, as well as foreigners who want to live in Thailand full-time, continue to rise. This indicates a positive growth for the Thai property market in 2019.
However, some experts and analysts expect that the market will lose steam in the coming years.
Thailand’s new lending policies in 2019
The Thai government will introduce tighter lending policies with reduced LTV-ratios as of April 2019. Therefore, many analysts predict a slow down in the condo market in Bangkok.
Bangkok is still promising for long-term investments as there’s much investment planned in its transportation systems. New BTS lines will be built in fringe areas in the coming years and make the city expand.
Thus, developers invest heavily in areas close to these upcoming BTS lines. China’s One-Belt-One-Road initiative (OBOR) will make Bangkok even more interesting, connecting the city with Kunming and other important cities in the region.
Year-on-year price changes in Thailand
The year-on-year price changes have been in decline the past couple of years, showing that the market is slowing down. The price increases for land, condominiums, and serviced apartments have slowed down, while the townhouse segment is more resilient.
Overall, there’s no major signs that a property bubble will pop within the near future as the market has grown with a slow pace the past years, with no sharp increases.
According to the HBA (Housing Business Association), Thailand’s property market builds on real demand, not speculative demand, making the real estate market less risky.
What’s driving Thailand’s property market?
Below I’ve listed some reasons why I believe that Thailand’s property market will remain stable in the coming time.
- Thai property is still affordable compared to other countries and cities in the region, like Mainland China, Singapore, and Hong Kong. Buyers from these countries still see Thailand, and especially Bangkok, as attractive to buy property
- There are a number of new mega projects planned that will affect Thailand’s market positively. Some examples are the EEC (Eastern Economic Corridor), China’s One Belt One Road project, several new metro lines, and other mass transportation projects. These projects will enhance the infrastructure, driving future growth
- The quality of new residential units in Thailand is above par, with well-known brands and international developers working in the Thai real estate market. Foreign partnerships with local developers continue to increase. Several Japanese developers, like Tokyo Tatemono Co., have entered the Thai market in 2018
- There’s a constant increase of foreign buyers and the government continues to introduce investment-friendly policies. Almost 25% of the buyers in the upscale areas of Bangkok are foreigners
New property projects in Bangkok
There are hundreds of new condominium and apartment projects under construction in major cities, with many located in Bangkok.
You can find most of these projects along the new BTS lines that are currently under construction, and expected to be completed soon.
As mentioned, Thailand plans to build several mega projects to uplift its infrastructure. This is well-known among international developers that flood the market to build condominium units close to the new infrastructure.
These areas offer great potentials for price increases in the future.
In Bangkok alone, there are around 100,000 condominiums units under construction, planned to be completed in Q4 2018 and in 2019. There’s a high demand for serviced-apartments, with around 60% of these apartments located in the Upper and Lower areas of Sukhumvit.
Thailand’s changing demographics
Thailand faces challenges due to demographic issues. It’s ranked number 3 globally in terms of fastest shrinking working age populations.
Vietnam, on the other hand, has a population that will increase from around 95 million to 120 million until 2040, and 50% of the population are below 30 years old. We see a similar trend in the Philippines.
So far, the demographic issues have been negated due to the increased number of foreign investors.
One thing is certain for the Thai market: expats and other foreigners have helped to keep the market above the surface.
Thailand’s property market has remained positive and fairly steady in the last decade. It will most likely remain the same in 2019, despite some warnings that the market may slow down.
Cities like Bangkok and Chiang Mai are expected to grow with a decent rate, but that’s not the case in other cities, where the market has slowed down significantly more.
You should also keep in mind that the market performs differently depending on property types and locations. The luxury segment with properties located in the central areas in Bangkok continue to attract a vast number of foreigners.
Low and medium priced properties in the suburban areas, that are mainly built to cater Thai buyers, has seen a greater oversupply, and with a more shaky market.
All in all, as long as we see a continuous demand from foreigners expats, we can expect a positive growth, especially for properties located in strategic and central areas.