Real estate experts in Thailand believe that the direct impact of the Russian-Ukrainian conflict on the real estate market in Thailand will be insignificant. But there will be an indirect impact. There will be an increase in oil prices, which will affect the Thai economy as a whole. This will have an impact on purchasing power when buying real estate. The situation will lead to inflation and may lead to an increase in the interest rate.
However, investors continue to invest in real estate, because it is a low-risk investment asset and housing prices rise above the inflation rate. Especially in the current market conditions, when good assets are offered on the market at affordable prices.
The revival of the country's tourism sector may lead to an improvement in the situation on the real estate market. The government is trying to open borders with a large number of countries to stimulate the tourism sector. However, hopes for a speedy return to pre-crisis indicators are not expected. It is estimated that this will take almost two years, and the indicators of «pre-COVID» period will return no earlier than 2024.
Before COVID-19 pandemic, office buildings were the most profitable investment, the market did not fully meet the needs of tenant companies. High-quality new buildings, large-scale mixed-use projects such as One Bangkok and Dusit Central Park were launched. Bangkok's office building market will remain strong in terms of rents. In general, at the moment, the demand for office space rental has slowed down due to the pandemic.
Until 2020, the rent was stable. The number of available spaces for rent has increased over the past year. As a result, the rent has decreased. In 2021, the average rent for office space decreased by about 1.3% compared to 2020, currently the average rent is 618 baht/m2. For Class A buildings, the average rental rate has decreased by 2.8% and currently stands at 908 baht/m2.
The condominium price index has remained below the baseline since the start of COVID-19 pandemic. Condo prices in Bangkok have fallen more than across the country. Meanwhile, the mansion price index has been trending towards constant growth over the past 4 years, especially in the Bangkok area. The price index for townhouses also continues to grow.
The main factors that will affect the real estate market in 2022:
- Government measures, such as the expansion of measures to reduce transfer and mortgage fees to 0.01% by the end of the year, including the easing of LTV measures that allow you to take out a mortgage without a down payment.
- Domestic political factors, including upcoming elections, which will slow down the decision to buy and sell real estate for both buyers and sellers.
- Conflict factors in foreign countries may affect energy prices and this will accelerate the rate of inflation in Thailand.