Thailand property markets are very gigantic and interest investors around the world to invest with the ease in laws and regulations of property ownership or long-term lease.  Let’s understand the proper market situations of real estate in Thailand from Agency for Real Estate Affairs which is the largest real estate information centre in Thailand.

 

376,757 housing units are still available for sale in Thailand nowadays.  These are the units on the hands of housing developers.  Each units are worth on the average Baht 2.819 million (USD 90,935).  Therefore, the overall overhang value of these developments is as large as USD 34.261 billion.  It is expected that the absorption could be for another two years to go.  It could be longer because there are new supplies coming over time.

 

One amazing fact is that most of the available units for sale are in the Bangkok Metropolitan Region (BMR) consisting of Bangkok and another five vicinity provinces.  This is similar to Jabodetabek which consists of Jakarta and other vicinity provinces. To be exact, 226,645 units are still available in the BMR and another 150,112 units are in other provinces.  Thailand has 76 provinces. However, most housing developments are in Bangkok.  There is no other urban centre where there are population over one million.  Bangkok is a primate city indeed.

 

During 1994 to 2021, Pruksa Real Estate Public Company Limited (PS) is the largest real estate developers.  In the case of owner-occupied housing, PS developed 707 projects with 245,493 units for sales. The number is some 50% larger than that of the National Housing Authority.  It develops some Baht 538.347 billion or USD 17.366 billion.  Other  renowned developers include Asian Properties Plc, Sansiri Plc, Land & House, Plc and Supalai Plc.  Of the 10 largest developers in Thailand, they developed some 32% of the total value of the overall housing developments.

 

During the first quarters of 2021, only 44 real estate projects were newly launched where most of them were residential properties.  The total number of units launched was 9,561 with a total value of Baht 70.234 billion or USD 2.266 billion.  This implies the shrinkage of new real estate developments in 2021.  Agency for Real Estate Affairs forecasted that the overall housing units launched in 2021 would be 60,151; whereas, it was 73,043 units in 2020.  The shrinkage would be for 18%

 

During the first quarter of 2021, some 50 public companies and their subsidiaries launched for 71% of the total new housing supplies.  This means that larger and stronger companies can still survive during this pandemic period.  Housing worth over USD 300,000 per unit which are considered those for higher income groups are still have good performance.  On the other hands, low-cost housing units (USD 80,000 per units) cannot be sold and some small developers are in arrears to financial institutions.  The pandemic makes lower income families poorer and could not afford to buy a housing unit.

 

In Bangkok, apart from housing, other developments are in trouble particularly commercial properties.  The Thai Appraisal and Estate Agents Foundation recently published the annual capitalization rate for 2021 in Thailand and found as follows:

1. Warehouse/Factory, 5-7%
2. Shopping centre, 6-7%
3. Office building, 6-8% for those in the CBD and 5-7% for those in the outskirt.
4. Serviced Apartments, 5-7%in the CBD and 5-6% for those in the outskirt
5. Rental Apartments, 3-4%
6. Hotels, no capitalization rate because of the pandemic resulting in no income.

 

The pandemic makes less need of office spaces and hotels.  Today, Bangkok has some 9 million sq.metres of office spaces renting at Baht 700 per sq.metre (USD 23).  The supplies would be 10 million sq.metres soon.  However, the demand might be decreased resulting from the stage of ‘work from home’.  In the case of hotels, those with no income for two to three years would have a value down  for some 20% If they were in debt to the bank, the discounted prices could be only 60%.

 

In addition, the Thai Appraisal & Estate Agents Foundation also conducted the standard costs of construction for Bangkok as a base for property valuation in Thailand.  Some selected costs are as follows:

1. Detached house, Baht 12,400 per sq.metre (USD 400).
2. Rowhouses, Baht 11,100 per sq.metre (USD 358).
3. Apartments, 25-36 floors, Baht 25,000 per sq.metre (USD 806).
4. Office Building, 21-35 flors, Baht 26,400 per sq.metre (USD 852).

 

During the first four months of 2021, the prices of steel were increased for 20%  This affected construction costs.  On the whole, it helps increase some 2.7% for the overall construction costs which has no significant effect to the industry.  However, steel costs are still increased over time.  If the steel cost increases for some 35% and over, it would help increase housing prices.

 

Last but not lease, land prices in Bangkok is still stable.  The most expensive site are in the area of Siam Square, Chit Lom, Ploen Chit.   Land price is at Baht 825,000 per sq.metre (USD 26,613 per sq.metre or USD 2,472 per sq.foot).  In this area, a shopping centre can be built with an expectation for the monthly rent of net lettable area of Baht 3,100 or USD 100 per sq.metre per month.  On the whole, land prices increase for some 8% in 2020 and 6% in 2021.

 

After the pandemic, property markets in Bangkok and Thailand as a whole would be back because of strong tourism industry as well as the massive construction of mass transit in Bangkok and rails and motorways to other regions in Thailand.