Thai property market at a glance

Emerging trends such as digitalization, technology innovation, a sharing economy, human-and-personalised centricity, an ageing society and a working population dominated by millennials or  Gen Y – adults born after the early 1980s – are transforming  not only our lifestyles but also the way we do business, and in turn creating new business opportunities both locally and internationally.  All these trends have an influence on the Thai property market, forcing developers to constantly adapt and customize to meet fast-changing customer behaviour and expectations.  Delivering buyers’ experiences in terms of design, lifestyle, convenience of location, innovation technologies, green society and reasonable property prices are key to  achieving a greater market share or at least maintaining current sales levels and is particularly challenging in an era where economic and other external factors are adversely affecting purchasing power and demand for properties.

Based on the Thailand Development Research Institute’s (TDRI) analysis of Thai macroeconomics in the property sector, it can be seen that the economic slowdown and minimal population growth are pulling down demand for property.  Also,  5 contributing factors to S-Curve growth in the past years, namely urbanization, a tourism boom, properties located near BTS Skytrain/underground trains, Thai border trade,  and foreign purchasing power are all in slow mode, said Nonarit Bisonyabut, a senior academic at TDRI.  Looking forward to the next 10 years, he believes that government support in pushing ahead the EEC, the aeropolis project coming on track, getting the fully-integrated public transportation system successfully in place, and foreign investors in residential and industrial real estate as well as increased tourism particularly from China will add momentum to the Thai property sector. These positive factors will offset such factors as the soaring level of Thai household debt, now near 78.7 per cent of GDP, tightened government measures and regulations, and economic uncertainties and externalities.

Surapol Opatsatien, chief executive of National Credit Bureau Co Ltd agrees, adding that financial literacy and tighter credit to individuals must be prioritized and implemented to curb potential risk-sensitive groups such as (i) individuals with income of less than THB30,000; (ii) individuals who are going to retire; and (iii) first jobbers.   Financial institutions should also set their own credit policies and internal control systems in line with BOT guidelines so that the delinquent loans are managed properly and effectively.

Kamolpat Swaengkit, MD of DD Property a Thai leading property web portal under Property Group Guru, notes that the overall Thai property market in 2020 might be hard hit by the continued economic slowdown, high level of Thai household debts, stringent measures of Loan-to-Value (LTV) and Debt Service Ratio (DSR) guidelines applied to each individual debtor and financial institutions, as well as the revision in land and building taxation laws. Even though the government has been trying to reduce the property transfer fee from 2 per cent to 0.01 per cent and has lowered the mortgage fee from 1 per to 0.01 per cent levied on properties selling for up  to THB3 million (from the previous THB1 million) to boost the property market, no significant impact on property sales is expected in the short term since the fundamental issue of creditworthiness of the majority of household debtors remains weak and unresolved while property prices are higher than expected.   Condominiums remain high on both the demand and supply sides, as consumers favour convenience while the developers gain by selling more condominium units in the CBD and on the fringes of the city along extended routes of the BTS/MRT transportation network. And as there is an oversupply of properties costing less than THB3 million, more promotional campaigns are currently being launched while new projects are being delayed

The last 3-year cumulative property price index shows 26-per-cent yoy growth in property prices but just  4-per-cent yoy growth in the last year.  Property is most in demand along the new extended transport routes, namely the yellow line (Ladprao-Samrong) and the orange line (Thai Cultural Centre-Suvintawongse). On the supply side, Wattana district is the preferred location for both condominiums and townhouses while Prawet district is mostly occupied by single residential properties.

To cope with fast-changing environment, the developers and property search platforms are applying and developing innovation technologies and new marketing strategies to attract new savvy tech buyers and high-end buyers who are less price-sensitive while maintaining a balance within different groups of buyers.   DD Property, under the Singapore-based Property Guru Group, one of the leading proptech companies in Southeast Asia, recently introduced the “PropertyGuru Lens Apps’ using Augmented Reality  and AI to provide customers’ with new experiences in data searching and convenience via smartphones.  The  “QR Code Apps” incorporating details of each property will be launched next year.   In the near future, we may find super Apps that combine a property search platform and a  financing package with e-KYC for pre-approved buyers with a very short processing time.  That’s why many proptech companies are revising their business models with advanced technology in response to the next generation’s demand.

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