Although the Thai government has not yet prepared a full report for 2022, we will analyse data from the first three quarters. In short, real estate in Thailand was 2.64% cheaper in the first nine months of 2022 compared to the same period of the previous year. At the same time, the number of transactions decreased while their value increased. This means that, despite a slight drop in actual sales, luxury housing remains in demand in Thailand's real estate sector.
Content:
- Sales statistics
- Transactions with foreigners
- Demand among Russians
- Demand among tourists
- Move to permanent residency
- Return on investment in 2022
- Things to expect in 2023
Sales statistics
Thailand saw a 35% decline in transaction numbers during the first nine months of 2022. The total sales for the third quarter of 2022 were 560.65 billion THB ($17.07 billion).
It’s worth noting that the sales of apartments in Thailand started to drop in 2022, continuing the decline of a year ago. In total, 38,687 condominium properties were sold in the country.
These statistics do not occur for sales of townhouses and single-family homes. Furthermore, the cost of such units is rising. E.g., their prices went up by 13% in 2020 and by 6% in 2021.
Transactions with foreigners
Foreigners acquired 7,290 properties in the country during the first nine months of 2022. The Chinese citizens, as in previous years, continue to lead in terms of purchases, with a 48.5% transaction participation. The Americans are in second place on the list with a share of 4.4%, while the French nationals are in third place with a share of 3.9%.
Branded real estate, similar to a hotel, has gained popularity among foreign nationals. However, such residences are more spacious and provide all necessary services on an equal level with 5-star hotels. Furthermore, the owners can reside in these properties for an indefinite period and rent them out when they are not present. Owners' stays in hotels are typically limited. However, branded apartments will make it simple to relocate to the country if necessary, without limiting the duration of your stay.
Demand among Russians
The demand from Russian nationals in Thailand remained stable. However, due to a decline in popularity among citizens of the first three countries, the Russians ranked fourth among foreigners. The share of Russian citizens was 1.36 billion THB ($41.39 million). Russian demand is expected to be significantly higher in the fourth quarter of 2022. Several factors led to this simultaneously: the mobilisation announcement, the restoration of air traffic, and the lifting of the coronavirus restrictions.
In comparison, the Russians ranked second on the list in 2019 and 2020, right behind the Chinese.
According to real estate professionals, Russians will be more likely to consider acquiring real estate in 2022. As a result, they were more concerned with the availability of nearby infrastructure facilities and transportation accessibility rather than profitability. However, one thing has not changed: Russians continue to prefer seaside living.
As most banks can do transfers, the impact of sanctions on the drop in interest rates was not noticed. Furthermore, developers are adapting to Russian citizens' needs by agreeing to accept payments in rubles or cryptocurrency.
Demand among tourists
Vacationers are among the most important factors for investors in determining the amount of profit due to rentals. The attendance and rental figures from the previous year are encouraging. Although the country has not yet returned to the pre-pandemic levels of demand, it’s confidently moving in that direction.
The last coronavirus-related restrictions were only lifted in the autumn of 2022. Despite this, 11 million tourists visited the country's resorts last year. Tourists are expected to reach 25 million by 2023, with at least 5 million Chinese tourists expected to cross the border.
Move to permanent residency
We also notice an increase in interest in permanent residency options. As a result, the number of Thai Elite visa holders will reach 20,000 individuals by 2022. Furthermore, 5,582 residence permits were issued in the last year alone, even though the government intended to only issue 4,407 visas. As in the other areas, the leaders are Chinese citizens, who obtained 3,131 permits.
Return on investment in 2022
The return on investment was slightly lower last year than before the pandemic but remained appropriate. As a result, the average profit due to rentals in 2022 was 5-7%. Real estate on the coast and islands is in high demand (as always) in the resort country. At best, returns are expected to rise to 8-10% in 2023.
In 2022, the following are the most profitable areas in Thailand:
- Phuket — 6.77%;
- Hua Hin town — 5.65%;
- Pattaya — 5.51%;
- Bangkok — 4.45%.
Please bear in mind that these are only average figures. When it comes to new buildings, premium real estate usually allows for a higher profit. You can turn to hotel management options for a guaranteed, passive and stable income.
Things to expect in 2023
According to government estimates, the demand for apartments and villas in Thailand should rise in 2023 as proactive measures are being put in place. As a result, the authorities finally decided to transfer land ownership to wealthy foreigners. However, future owners should meet several requirements and invest more than $1.21 million in specific districts to be eligible for this. In addition to the Thai Elite, the government has created a new visa programme for these same wealthy foreigners. The government is hoping to attract more interested parties by requiring lower visa maintenance costs.
The authorities intend to interest up to one million migrants as a result of support measures. In today's world, where freelancing is becoming the new norm, this is completely possible. It’s important to note that wealthy foreigners prefer long-term rentals and don’t like skimping on their comfort.
It’s also essential to consider the rising cost of land. The government indexed the prices of plots on January 1, 2023, so land costs 5-8% more this year. In percentage terms, this will most likely appear to be a drop in demand, but it will not affect the sale of luxury real estate.