2022 Bangkok Condo Market Outlook

The COVID pandemic changed all and every aspect of our lives, including the property market.  Housing prices soared last year in many countries as people left the hustle and bustle of city living for more space in the suburbs. What about Thailand’s real estate market outlook in 2022?

Introduction

Bank of Thailand forecasts 3.4% GDP growth for 2022, which is a great increase from 0.9% in 2021. Of course, the number of inbound tourists and the performance of the exports industry will have a significant impact on this projection.  Thai government reactions will be crucial during the first half of 2022 especially with the Omicron spread.  The real estate market is forced to adapt to continuing challenges, while buyers become more picky and sophisticated, and developers are challenged to bring more adapted products into this constantly evolving market. 

Key Risks

Since we are still amid the pandemic, there are various risks to be observed in 2022.

COVID-19 Development

The risk of the emergence of new variants of COVID-19 and how responsive the vaccines are to them. The response at the government level and the reaction at the individual level towards the situation will be key

Government Decisions

Monetary policies, incentives, restrictions, and other key decisions by the government will have a significant impact on market movement

International Travel Policies

The long-awaited return of international tourists and how each major feeder market country views outbound and inbound travel will be a key factor in Thailand's economic recovery

Spending Power

With tourism as a key economic driver for the country and other business interruptions, two years into COVID-19, disposable income for locals is being challenged like never before with uncertainties ahead

2022 Trends

Last year, speculative buyers almost disappeared. As a result, developers had to focus on local customers to sell completed projects. In 2022 we will see slower sales in the condominium market as this group typically takes longer to make buying decisions and is much more selective. There is also increasing demand for low-rise housing as many locals prefer buying a house to a condominium given that the price is more affordable and more privacy is desired. Projects that cater to specific markets with solid demand drivers, such as projects near schools/universities or branded residences, will continue to perform despite the economic downturn as demand in these markets remains. Properties in resort destinations are still attractive to local buyers but the price must be right. Across all market segments, buyer purchasing power will continue to feel the pressure from COVID-19-induced financial stress and business disruptions. Low interest rates and easing LTV restrictions should help stimulate demand but low affordability is still likely to be a significant factor. Best deals will be sought after as buyers are more sophisticated and have a clearer understanding of the position that the developers are in.

Bangkok CBD Market

Downtown Condominium Market in Cautious Mode. Last year was a quiet year for the downtown condominium market with no new project launches for almost three quarters for the first time in history as developers take a more cautious stance on the market, waiting for the signal of recovery before launching new projects. The level of unsold luxury condominium supply in the downtown market forced developers to adopt a cautious approach resulting in many planned downtown projects having their launches delayed. We expect some of these projects to be launched in 2022 as the existing inventory is absorbed. Developers look for a different market segment where there is still strong demand, especially outside CBD areas to launch new projects as the prices are more affordable to buyers. Many developers are revising their development plans to match changing market demand both in terms of pricing and product type. The demand of buyers has become more selective, forcing developers to rethink their strategies. Buyers will focus more on the practicality of space and value-for-money products and take longer to make purchase decisions. As the overall economy and market sentiment have not improved much, we believe that the condominium market in 2022 will be only slightly more active than last year. Existing inventory will continue to be absorbed by the market which could help the market get closer to the equilibrium point where supply and demand are more balanced.

Recommendations for buyers in 2022

• you should carefully explore the market for recently completed properties, and projects under construction, to find the best deal
• you should carefully evaluate the pros and cons of buying a condo or a house, based on your lifestyle and budget
• as an investor, you can still find good deals for centrally located projects that were recently completed by well-reputed developers

Courtesy: CBRE Thailand