Real Estate, Tourism, and Economic Opportunities in Thailand in 2023

In mid-March of this year, there was a major seminar, the “Real Estate and Economic Indicators for 2023″ organized by three Thai real estate associations: the Thai Real Estate Association, the Home Builders Association, and the Thai Condominium Association. This seminar was an opportunity for real estate leaders to present their perspectives on the real estate sector’s impact on the Thai economy in 2023, with several qualified speakers covering various topics. The page sees that the perspectives presented were beneficial for the construction industry in our country, so we would like to share this information for reading.”

This event was honored by Dr. Chadchart Sitthiphan, the Governor of Bangkok, as the chairman of the opening ceremony, and he gave a special speech on the topic of “How urban planning and government agencies can support the real estate industry”. He stated that in the future, urban planning must be improved and direction must be clear. The city planning committee must work with entrepreneurs and stakeholders to jointly design and develop urban development criteria that meet the needs of the community. In the past, the city plan did not indicate what could be built on a specific area, but instead, it specified the maximum volume that could be built. This made the city plan a determinant of land prices, which developers tried to meet to maximize their profits. Therefore, we can see that land prices, especially those along the sky train route, have increased, making it difficult for working people to afford housing in the city and forcing them to live in the suburbs.

Dr. Wichai Wiratkaphan, the Inspector General and Acting Director of the Real Estate Information Center at the Government Housing Bank (GH Bank), stated that real estate and tourism play an important role in driving Thailand’s economy. In the past year (2022), it was found that there were a total of 11,561 units of foreign-owned condominiums transferred, an increase of 41%, with a total value of transfers amounting to 59.261 billion baht, an increase of 49.2%. Chinese nationals still remain the largest group of foreigners buying real estate in Thailand.

Mr. Peerapong has discussed with Mr. Mee-sak Choonhurak and Mr. Wasan Keang-siri, the presidents of the Thai Real Estate Association and the Business Association for Housing Development, respectively, on the topic of “Trends in the real estate market and strategies to drive the Thai economy forward.”

Mr. Mee-sak Choonhurak, the president of the Thai Real Estate Association, said that the overall picture of the real estate market this year will change according to the declining population and the increasing elderly population. This will lead to new housing projects that cater to the elderly population, while the new generation, especially Gen Y, still has problems with high debt and a lack of purchasing power for housing. Therefore, we need to start anew, reduce the problems, and address the gray area in financing that is illegally purchased, and attract foreigners, especially the Chinese, who want to buy a house legally. This will help bring more money into the country.

Mr. Wasan Keang-siri, the president of the Business Association for Housing Development, said that the flat housing market has accelerated since 2022 due to the relaxation of the LTV policy and low-interest rates. In 2023, the flat real estate market will stabilize or slow down slightly, but there is still hope for a boost from positive factors. However, in the real estate business, there is still room for adjustment. Nevertheless, there are still challenges in monitoring the issue of commercial bank loan rejections, which still remain at over 30%. This can affect the overall real estate market if not addressed properly.”

Mr. Peerapong Charoonek, the president of the Thai Condominium Association, stated that the overall picture of the Thai property market this year is positive. This is due to the trend of the tourism and service businesses that have resulted in increased employment and income for Thais. Condominium sales have shown a recovery trend of around 30% from 2012, with transfers worth around 1.9 trillion baht, and the 1-3 million baht price range is expected to be the protagonist this year due to the low supply and continuous demand, especially in the metropolitan and regional areas where tourist destinations still have a demand from the service sector workforce. The 200,000 baht/sq.m. Condominiums are expected to take 2-3 years to sell, with a demand from mainland Chinese buyers who want to relocate to Thailand. They may be reintroduced in 2024, and for rental properties, long-term foreign tenants have been gradually returning.

Dr. Kobsook Phutrakul, Deputy CEO of Bangkok Bank, commented that the current year is experiencing an unprecedented economic volatility. Although the overall economic situation in the first two months of the year appeared promising, the collapse of two US banks has caused concern and it is likely that there will be at least a 3-year continuous crisis starting from the end of 2023. This year, the US will enter a recession in order to reduce inflation, and reset everything for a new economic stimulus in 2025. During this period, there will be a widespread economic downturn, so the main goal for Thailand in 2023 is to position itself as the investment center and attract more investment from China and the US, who are looking to relocate their bases to Thailand. This can be achieved through the support of BOI (Board of Investment). In 2022, BOI had the highest investment volume in the past 10 years, with a 30% increase in investment from China, which remains the top investor in Thailand.

Mrs.Namfon Boonyarat, Deputy Director-General for Policy and Planning of the Tourism Authority of Thailand (TAT), said that the current trend of Chinese real estate investment in Thailand is one of the driving factors behind the influx of Chinese tourists. Therefore, Thailand’s tourism industry needs to quickly adapt to keep up with the Chinese tourists, who are now partially comprised of Chinese entrepreneurs who have shifted their focus from being tourists to running their own tour businesses in Thailand. This has a direct impact on the Thai tourism and related industries, resulting in slower business growth than expected.

Mr. Boon Yong Sakul, Chairman of Boat Development Company Limited and former President of the Phuket Real Estate Association, said that there has been an increase in foreign tourists in Phuket, particularly Russians who are now living and staying in Phuket more frequently. This has led to large hotels having occupancy rates of 95-97% from monthly room sales. Additionally, new hotels in the Luxury and Super Luxury segments are starting to open on the island. However, Phuket still needs to accelerate its infrastructure development, including the water supply, waste management, and solar power businesses.

These slides contain some of the information presented in the seminar. Thank you to the Thai Real Estate Association, the Housing Business Association, and the Thai Condominium Association for organizing the seminar and providing useful insights for our construction industry.