Understanding the Growth of Property Sector in Thailand [2023]

Real estate sector in Thailand have undergone extraordinary surge in recent years, captivating the interest of local and international investors alike. Property sector have proven to be an instrumental force in advancing the country's economic prosperity and have present a plethora of investment prospects. In the following discussion, we will explore the pivotal factors that have stimulated the expansion of the real estate industry in Thailand. By focusing on high overview factors contributing to property sector and the risks that may involve Thailand real estate in 2023. 

Government Policies and Initiatives

Thai government introduce various policies and initiatives to boost the country's economy and the real estate sector have benefited from new policies in recent years. One such policy is the Eastern Economic Corridor (EEC), which aims to transform the eastern provinces of Thailand into a hub for technological and industrial development. EEC incentives located in Chonburi province such as Pattaya, Rayong and Bang Sean attract a significant amount of investment into the country, resulting in the construction of new infrastructure, commercial and residential buildings and modern transportation systems.

The government did introduce policies that encourage foreign investment, such as Thailand Investment Act, which offers tax incentives and streamlined processes for foreign investors. These policies made it easier for foreign buyers or expats to invest in Thailand real estate market, further contributing to the growth of property sector. Furthermore, the Thailand investment Act supports major property developers in Thailand by having more foreign buyers, especially buyers from mainland China in low-rise condos launches that is improving the real estate sector as a whole in "Land of Smiles". 

Tourism Rebound 

Thailand's strategic location in Southeast Asia makes its a very attractive destination for investors and even expats seeking to move to paradise. The country serves as a gateway to the rest of the region, making it an ideal location for businesses looking to expand their operations. The property sector benefits from the country's location and good quality standard of living compared to its neighbor's. With an increase in demand for commercial and residential properties from both local and international investors and low interest rates of late, is boasting new supply in the real estate sector.

New Condo Launch Trends in 2023

A noteworthy real estate trend to take note of is the timely delivery of a good supply of residential units. Timing schedule condo developments in Thailand have surge in pre-sales, which have consequently propel the growth of the property sector. Furthermore in comparison to other countries in Southeast Asia. Thailand's real estate sector features relatively lower property prices. As a result, Thailand emerged as an attractive destination for property buyers, especially for retirees and expatriates from developed countries seeking reasonably priced housing alternatives. The combination of these favorable factors, coupled with Thailand's natural beauty and welcoming culture, have made Thailand a highly sought-after destination for property buyers.

The real estate market in Thailand is experiencing a boost in confidence, as evidenced by the surge in new launches by developers. The value of these new launches is expected to reach Bt319bn in 2022, reflecting a remarkable growth of 127% from the previous year. Low-rise condo in Thailand make up a significant portion of the new launches, with their value increasing 118% YoY to Bt226bn. Additionally, new condos have increased to Bt92bn, up 152% YoY. Although this is still lower than the peak level of Bt183bn in 2018, the deviation is due to labor shortages, not a lack of demand.

Looking ahead to 2023, we expect the real estate sector to show strong earnings growth of 27%. While the labor shortage and the appreciation of THB against USD in 4Q22 will impact some developers' earnings, we predict that the sector's earnings will remain flat QoQ for 4Q22, and still show YoY growth. The rights transfers of many developers will remain robust due to the heavy backlog transfer and decisions to move planned revenue from 1Q23E to 4Q22E. This action will reduce the impact of higher transfer fees, resulting in record-high annual earnings for AP, BRI, ORI, SC, SIRI, and SPALI in 2022.

Conclusion

Thailand's property sector is a thriving market sector due to a combination of reasons such as government policies, tourism growth back in 2023, strategic location and reasonable pricing. These elements have established a conducive environment for property developers and investors, leading to more commercial and residential properties, especially low-rise condo launches in the country. As the economy continues to expand and the government introduces further measures to attract foreign investment, property sector success is projected to endure. The real estate market in Thailand presents a unique chance for both domestic and global investors seeking to grow and invest.