What was 2022 like for the Thai property market and what to expect in 2023?

What was 2022 like for the Thai property market and what to expect in 2023?

Recent years have been extremely unpredictable for the international real estate market. First, against the backdrop of the coronavirus pandemic, there was a sharp decline in investment around the world. After borders were opened, an unprecedented rise began, the growth rate of which was actively driven by Russian and Ukrainian investors fleeing from the unstable situation in their own countries. Let's take a look at how prices for real estate in Thailand changed in 2022 and find out what forecasts are given by experts on the local housing market for 2023.


Property sales in Thailand in 2022

The year of 2021 turned out to be a failure for the Thai real estate market, with the number of transactions falling by 41.8% compared to 2020. Throughout 2022, there has been a similar yet more modest decline in demand. In general, for 2022, the Bank of Thailand recorded a 35% drop in the number of real estate transactions compared to the previous year. There was also a decline in real estate value by 1.48% in the 1st quarter of the year, by 2.25% in the 2nd quarter, and by 2.64% in the 3rd quarter. Indicators for the 4th quarter have not yet been published.

However, these figures do not apply to luxury properties. On the contrary, in the segment of luxury housing in 2022, an increase in demand was recorded. At the end of the year, demand for prime residential real estate in the kingdom outstripped supply. This trend is expected to continue in 2023.

We should also note that sales of those condominiums that can be issued to foreigners in full ownership have decreased. At the same time, sales decreased by 3.8% over the year. In the 3rd quarter, this figure was 38,687 transactions.

What was 2022 like for the Thai property market and what to expect in 2023?

Demand from foreigners

During the first three quarters of 2022, foreigners purchased 7,290 apartments in Thailand. As previously, the Chinese take first place: in 2022, they accounted for 48.5% of all apartments purchased by foreigners in Thailand. Second place is taken by US citizens with a share of 4.4%, and the French, who bought 3.9% of apartments, take third place.

What to expect in 2023?

Coastal property is highly valued by foreigners in an area of up to 2 kilometers from the beach. Such housing is always sought after, so waterfront villas and condominiums will be popular in 2023.

Tourism in 2022

The Thai government hoped that in 2022, after the entry restrictions removal, tourists would immediately be drawn back to the kingdom. Vacationers really came here: 11,000,000 people visited the country's resorts last year. This made Thailand one of the fastest-recovering countries from the pandemic. However, the expectations of the authorities were higher.

What is expected in 2023?

According to the Tourism Authority of Thailand, the government has no intentions to introduce new entry restrictions due to the coronavirus pandemic. The authorities want to attract as many tourists as possible to the country in order to restore the economy quickly.

It is expected that 25 million tourists will visit Thailand in 2023, 5 million of which are Chinese. In comparison, in 2019, 35 million foreign citizens visited the country. Therefore, full restoration of the tourist flow is out of the question as of now.

What was 2022 like for the Thai property market and what to expect in 2023?

Real estate rental income in 2022

To understand the situation better, consider the average percentage of income that housing in the kingdom offers its owner. In the most popular areas of the country, the annual return on capital from rent is:

  • Bangkok – 4.45%;
  • Pattaya – 5.51%;
  • Phuket – 6.77%;
  • Hua Hin – 5.65%.

These are average figures. The yield from renting new apartments out exceeds it by several points.

Return on investment in 2023

According to experts, 2023 will be profitable for investors in residential properties in Thailand due to the low cost of entry into the market and relatively high returns. Residential real estate for investment in Thailand still cost minimum $100,000. The yield has already reached 4.5 to 7% and will increase alongside the growth of the tourist influx to the country. As always, there will be a high demand for real estate on the resort islands of Phuket and Koh Samui. In the optimistic scenario, when the tourist influx indicators approach the level of 2018—2019, real estate investors will be able to reach the pre-pandemic level of return in the amount of 8 to 10%.

Slowdown in construction

According to the statistics from the construction sector, in 2022 the country did not fully recover from the pandemic, so just a few new residential complexes were introduced into the real estate market.

What will happen to the primary housing market in 2023?

It is expected that many investors will want to buy an apartment in a new development in Thailand since demand in this segment is recovering the fastest. However, there are few offers on the market right now. Therefore, the cost of property in new developments will increase.

According to data for January 2023, property in new developments increases by 25 to 30% in price immediately after commissioning. This adds value to them in the eyes of investors and pushes demand up.

What was 2022 like for the Thai property market and what to expect in 2023?

New trends in the Thai real estate market

In 2023, a number of changes are expected in the Thai real estate market that should be taken into account.

Foreigners are allowed to buy land

On October 25, 2022, the country’s government adopted a resolution according to which certain categories of wealthy foreigners will be able to acquire the right to buy land in the country. To do this, it is necessary to invest more than $1.2 million in a socially significant area. To retain the right to own land, the investment must remain in the economy for at least 3 years. We should note that earlier long-term rent for foreigners was only possible for land.

The popularity of branded residences

One of the most popular trends in recent years in the field of real estate around the world has been the construction of branded residences. They appeared a couple of years ago, and now they have already become a new trend among investors, including in Thailand.

A branded property is a fully serviced apartment managed by a large company with an international reputation. The main differences from hotel residences are a larger area and the possibility of permanent residence in the apartment. As a rule, hotels allocate only a short span of time for vacation and personal accommodation to the owners of the rooms.

Difficulties in buying property abroad for Russians

In 2023, when buying property abroad, Russians will face the same problems that began in 2022. Not all banks can make transfers of funds abroad, and the amount of the transfers will be limited.

This does not mean that it will be impossible to pay for an apartment or villa in Thailand. Already today, in order to facilitate the process of buying property in the kingdom, a number of developers offer investors to pay with cryptocurrency.

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