Why Thailand’s Real Estate Value is Going Strong

Thailand’s property market is on a rise. Foreign investment is exploding, and apparently continues to do so, especially in the luxury market as foreign expatriates continue to invest in the housing and condominium markets. The long-term resilience of Thailand’s real estate growth has often been called into question, yet considering the country’s steady rise in market value since 2001, there seems to be no question about the fact that the country is going to continue enjoying a healthy real estate market.

According to the South China Morning Post, a fifth of the capital’s condos are owned by foreign investors and buyers – however, the majority of growth comes in domestically.

Condominium Value to Rise with Mass Transit

Bangkok’s property market is forecast to rise by as much as ten percent in the coming years, from 2016 to the end of the decade, as the government invests in the area’s mass transit systems throughout the luxury and suburb districts, driving more value to the many condo developments and houses currently on the market. “When the government starts to invest in infrastructure projects,” the CEO of Pruksa Real Estate began, “that will open up new land for property firms to develop residential projects. This will challenge property firms to invest in new locations following the mass transit route from Bangkok to the suburbs.”

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Doubts Do Surface as Economy Drops

According to the researcher Global Property Guide.com, the Thai housing boom is a continuous force to be reckoned with. House prices rose by nearly five percent over the course of the last quarter of 2014, and the same quarter saw a soaring 14 percent increase in the price index for condominiums.

However, researcher Colliers points to newer data stating that the market has fallen behind somewhat, due to a decrease in demand for condominiums among expatriates and other investors. They state that the total of newly launched units in 2015 was nearly 30 percent lower than in 2014, and that developers are worried about the country’s purchasing power, which the government states will improve as 2016’s GDP is forecast to do better than the previous year.

According to the firm, the country’s mass transit projects are a “positive factor”. As the condo market drops, however, it forecasts that developers will instead focus on housing projects. “Some developers might decrease their new condominium projects in 2016,” the report writes, “but this still depends on the economic situation.”

Growth Signaled in the Industrial Sector Despite Economic Troubles

Another report by the firm shows that industrial developers are eyeing other industries as Thailand’s exports were lackluster in 2015 due to the economic slowdown, and a decrease in foreign investment. Among the key interests to industrial developers in 2016 and beyond are:

  • Special Economic Zones on lesser-developed border provinces to boost trade and the country’s industry.
  • Development in the Eastern Seaboard Area.
  • Government cooperation with the private sector through the Industrial Estate Authority of Thailand to build further industrial estates.

Luxury Real Estate Market on Rebound After August Bombing

A tragic bombing inside the Erawan Shrine earlier this year caused a large slowdown in property investments in Bangkok. The tragedy caused the death of 20 people, and has since been solved. Although the capital was sent reeling due to the attacks, it has shown strong signs of recovery since.

“The market is very resilient,” noted the director of asset management for Arch Capital, Jonathan Umali. “It dips down for a quarter or half a year, and then it comes back up.” Umali’s properties include beachfront condominiums outside of Bangkok’s city center, although other parts of the capital’s market also show signs of improvement.

SEZs Increase Demand for Development Outside of Bangkok

A survey by the Real Estate Information Center of the Government Housing Bank shows that several special economic zones are experiencing an uptick in development demand for commercial and residential buildings. Namely, the SEZs are within the provinces of Chiang Rai, NongKhai, Narathiwat, Mukdahan, NakhonPhanom, Tak, Songkhla, Sa Kaew, Trat, and Kanchanaburi.

Among the developments are Tesco Lorus and Makro branches, several shopping centers and shopping malls, and more pressure from the retail industry to develop land and construct businesses for a growing market of demanding consumers and shoppers. The growth in both domestic and foreign interest, especially among the retail industry, is attributed to the government’s investment in special economic zones and other infrastructure projects nationwide, planned throughout 2016, 2018 and 2019.

All-in-all, upcoming government projects and assurances forecast that 2016 will lead to more developments in suburb housing and the industrial sector, leading to further land purchases and an increase in land value nationally, especially among SEZs and surrounding regions, with effects being especially visible among online real estate and Thailand property news sites like DD Property. Stay tuned for more information on upcoming projects.