By the end of 2020, it was expected that the markket of Bangkok properties for sale would gradually recover this year thanks to the restart of international travel. Today, it has to be said that the recovery will not be until 2022.
With the outcome of the 3rd wave of COVID in Thailand still uncertain, banks are no longer extending credit to Thais as easily, so not all buyers can finalise their purchases. But in this situation, there are also opportunities for those with the resources. Here are the main trends in the new property market in Bangkok this summer 2021.
Developers postpone new projects
Bangkok’s most established developers such as AP Thai, Ananda or Sansiri have not launched any major projects this year and are banking on selling their remaining stock of units on already completed developments.
This approach is intended to address current issues: in terms of restrictions that may be placed on building sites, and also because buyers are currently more comfortable buying a completed, tangible asset. On the other hand, the Thai public is looking for more affordable resale properties or is simply choosing to wait or cancel plans to buy due to the decline in purchasing power and the difficulty of obtaining credit from banks. To compensate for this, developers of new properties have to propose promotional offers.
According to a study by the agency DDproperty (December 2020), 75% of buyers prefer to wait before buying, while 32% are uncertain about property prices and 31% have difficulty obtaining a loan.
Promotions “returns on Units” on projects completed in 2020
In this competitive real estate market, the players in the Thailand properties for sale market must propose original offers to a public ready to buy in a difficult context.
A trend we are currently seeing in Bangkok is to offer customers “returns on units”.
Some Thais – buying mainly with loans – made bookings in late 2020, unfortunately unable to predict the 3rd wave. Unable to proceed without cash, due to lack of loan from their bank, they had to cancel their purchase after paying their reservation deposit. On these units, the developer does not require new buyers to pay this deposit again, and it is therefore “offered” to those wishing to buy. Depending on the development, this translates into a 20-25% discount on the initial price.
These offers are open to foreigners who have enough liquidities to pay cash (note that in any case, Thai banks rarely extend credit to foreigners). Thais who would be willing to buy without credit can also take advantage of this, in condominiums in the heart of the capital, accessible in full ownership and completed. For those who want a pied-à-terre in Bangkok for retirement or future expatriation, this is a way to make the most of the crisis.
Pressure on the central rental market
Historically, wealthy expatriates have been staying near Bangkok’s business districts, and are the main drivers of the long-term rental market in the areas of Silom-Sathorn, Lumpini, Asoke-Thonglor, etc.
Today, the crisis has led to a decrease in the purchasing power of part of this expatriate population, and some choose to return to their country of origin, or to find a more out of the way, more affordable accommodation.
The rental market must therefore adapt in the same way as the sales market: landlords adjust rents downwards, and those who were banking on short-stay tourism turn to long-term rentals.
With average prices having fallen by 12% between 2020 and 2021, Bangkok will have fallen this year from 30th to 49th most expensive city in the world for expat executive accommodation (source: Bangkok Post). This makes it more advantageous for prospective tenants to take advantage of an affordable rental, or even for existing tenants to negotiate their rent down or find a better deal.
Progressive establishment planned for 2022
The “business as usual” recovery will take time for Bangkok’s new property market, but there is hope that conditions will be more favourable once vaccination is more widespread in Thailand. We note that this is accelerating thanks to the efforts of embassies and donations from Western countries (USA, UK, Japan…). This is a good sign for a recovery by the 1st quarter of 2022.
Developers who have reorganised their strategy accordingly, and who have been able to hold on, will be best placed to rebound from the crisis. Having proven their strength and adaptability in a globally complicated environment, they will have a head start on new entrants. This is true for Bangkok, but also in Phuket properties for sale, or elsewhere in Thailand and Asia.
Market experts predict another quiet year ahead as travel gradually recovers and the economy picks up, with a more pronounced recovery in 2023.
For more information on current real estate solutions in Bangkok or elsewhere in Thailand, please feel free to contact us.