Thailand’s Real Estate Market in 2021

Is 2021 a good year to invest in Thailand’s real estate?

Thailand is a country known for both business and pleasure. For several years, foreign investors have seen huge potential in the country’s real estate market due to its picturesque spots, diverse culture, and promising economic growth. 

However, the unprecedented changes caused by the global pandemic resulted in severe damages in the real estate industry. This leads to questions as to what lies ahead for property projects in 2021.

Life before COVID

In the previous years, Thailand experienced slow yet steady growth in foreign property investments. The number of foreign nationals and retirees consistently increased annually, as evidenced by recorded applications for work permits. Tourists also flocked to key destinations contributing to the country’s vibrant economy.

Most key cities, especially Bangkok and Chiang Mai, saw exponential growth in property investments. In Bangkok alone,  more than 60,000 new properties in apartments alone have been documented on top of other real estate projects. Provinces, which were comparatively less frequented, such as Phuket, also had their property and investment growth share.

A Pandemic-stricken Economy

While all industries suffered due to the pandemic, the real estate sector experienced huge losses. As the property market depends greatly on tourism, the downfall was expected as tourists, and foreign investments slowed down. The country imposed strict protocols, travel bans, and other safety measures resulting in decreased business and real estate engagement.

Key cities like Bangkok, Phuket, Chiang Mai, Pattaya, and Koh Samui saw almost 50% profit losses which worsened as the quarters went by. Such was primarily caused by the limited transactions from mainland China, Hongkong, and other foreign investors. It also didn’t help that the Bank of Thailand’s (BOT) loan-to-value (LTV) measure limited investors who would want to invest in multiple properties as higher deposits were required. 

In effect, property developers decided to delay ongoing and future projects, especially condominiums and hotels. Instead of creating new projects, existing properties were sold at discounted rates to improves sales and transfer ownership. All these led to decreased price indexes among various properties.

Better Things in 2021

Despite the challenging year, things seem a little better in 2021. While the economy continuously fluctuates and developers find means to compensate for increased expenses, the industry can slowly bounce back starting the second half of this year.

In general, Thai property fares better in terms of affordability against neighboring countries in territories in Southeast Asia. The country’s tourist destinations are even in better shape, which forecasts a vast market for tourists and foreign investors now that Thailand has begun opening its borders. Several pipeline projects are in place, such as in mass transportation, residential units, and other property projects to help boost the country’s infrastructure structure. Such means a boost in the real estate industry as well.

Similarly, foreign partnerships with local developers continue to surge, which resulted in quality residential projects. Market research from Thailand shows improved performance in Q4 of 2020, with sales focused on residential properties such as condominiums and villas. High-end properties are also beginning to see investment growth.

Opportunities in Phuket

Phuket remains one of the best destinations among tourists and retirees among the top spots in Thailand. Despite the devastating effect of COVID-19, rental demand appears to be at an upward growth in 2021. Developers have begun to adjust prices to compensate for previous losses resulting in better resale prices and ongoing developments. The Thai Baht has also weakened in the last year, translating into a better price for foreign investors.

As Thailand has set effective measures to mitigate the pandemic’s effect, the number of tourists coming in has begun to soar. Such promises a more viable real estate industry this year and onwards.