Land Price Indexes Spike in Q1 2023, Resulting in Significant Property Price Increases in 7 Prominent Areas
The first quarter of 2023 saw an upsurge in land prices across Bangkok, with outer-city areas experiencing a steeper rise than inner-city locales. The Real Estate Information Center (REIC) reported the largest increases occurred in Nakhon Pathom, Samut Prakan’s Bangphli-Bang Bo-Bang Sao Thong, Muang Pathum Thani-Lat Lum Kaew-Sam Kok, and Muang Nonthaburi-Pak Kret.
The implementation of property development along current and future mass transit lines contributed to the hike in land prices. DD Property Thailand reported significant price hikes in inner-city districts, with Pathumwan and Thonburi standing out for the largest property price and rental price increases, respectively.
Moreover, new energy-saving building criteria implemented as of March 13th have led to a 5% increase in construction costs. The new regulations encourage energy efficiency and conservation by promoting the use of energy-efficient materials, systems, and appliances, along with the incorporation of renewable energy sources.
Despite the initial increase in construction costs, the new criteria are expected to result in long-term energy savings and cost reductions for building owners and occupants.
Chinese buyers pursue ‘freedom’ and fulfill their dreams by purchasing luxury real estate in Thailand.
Reportedly, more Chinese people are turning to Thailand for property investment. Many are drawn to the country’s affordable properties, international schools, and quality healthcare facilities, which are out of their reach in China’s top cities. Retirement and the “freedom of society and life” that Thailand offers are also significant factors in their decision to purchase overseas property.
Since Beijing resumed international travel, Chinese buyers are increasingly looking to acquire a second home in Thailand as a safety net against future pandemics and economic risks. Despite the figure being lower than pre-pandemic times, the country expects at least 5 million Chinese visitors this year, some of whom will likely purchase property. As a result, Thailand is becoming an increasingly popular destination for Chinese buyers seeking a second home and a better quality of life.
The property industry in Thailand remains optimistic for a profitable 2023 despite inflation concerns.
The real estate industry in Thailand is on the rise. According to Supalai director Prasas Tangmatitam, the firm sold 115,902 units in Thailand in 2022, up from 75,364 in 2021. This is an indication that the sector is thriving.
Prasas attributed the growth in property sales to the fact that the 26-30 age group of homebuyers was not as severely affected by the economic impacts of the Covid-19 crisis. He also expressed confidence in the Thai real estate market’s recovery due to the increased tourism and investment since Q3 2022.
Despite inflation being responsible for the rise in construction material prices and mortgage rates, Prasas believes it would not significantly impact the property market. He predicts that the demand for new homes will reach 120,000 units in 2023.
To respond to the increasing demand, property firms are expected to focus on promoting and enticing young homebuyers to purchase homes this year. With an optimistic outlook for the Thai property market, the sector seems to be hopeful for a profitable 2023.
Overall, the Thai real estate market is experiencing an upward trend. With favorable conditions in the economy and the property sector, there is potential for more growth and development in the coming years.
Headlines Interesting trends
Thailand’s economic and real estate outlook is bright, as various indicators point to a promising start in 2023. The positive growth trends seen in the final quarter of 2022 have continued, with a recovering GDP and higher-than-expected international visitor numbers. These trends suggest that the real estate market is on an upward trajectory.
The Bank of Thailand projects a GDP growth of 3.6% in Q1 2023, up from the forecast of 3.2% for Q4 2022. This growth is driven by a surge in international tourism and continued domestic demand, both of which are expected to continue in 2023. However, certain factors, such as low-income earners’ debt levels, non-resident investments, and policy uncertainty after the 2023 election, could potentially hinder growth. External factors such as the Russia/Ukraine crisis, China-Taiwan tensions, global economic downturns, and fluctuations in the baht exchange rate could also impact growth.
Strong Growth
The residential real estate market can be broadly split into three sectors, with each sector having slightly different results and forecasts. In the downtown condo market, new launches slowed significantly during the past three years compared to pre-Covid levels. However, developers are expected to launch many more units in this sector in 2023. The midtown and suburban condo market, on the other hand, bounced back strongly in 2022, nearly reaching the new supply numbers of 2019. The forecast for new supply in 2023 is 50,000 units, with a focus on maximizing space and functionality, green areas, recreational facilities, and technology. The low-rise housing market remained relatively stable, with new supply numbers consistent with the previous year.
Interestingly, the luxury and super-luxury housing markets experienced a surge in new launches, with 2022 seeing four times more new launches than the previous seven years’ average. This trend is expected to continue, as buyers’ wants and needs have shifted towards multi-generational living and working from home.
The foreign market remains a vital component of future growth, with many holidaymakers impressed by Thailand and returning to purchase property. China has always been a key segment, but more interest is expected from second-home buyers and investors from South East Asia and the Middle East.
However, market recovery may be hindered by factors such as rising loan interest rates, inflation, and the construction price index. Nevertheless, the residential property market in Thailand is heading in the right direction, with real estate experts predicting stable condo prices as developers try to clear unsold inventory.
If you are considering investing in Thailand and need to fine-tune your knowledge of property market values, contact our real estate team today. With offices throughout Thailand, Lazudi can assist with your property needs.
