Property Market Overview 2022.

The Thai real estate market continued to face challenges throughout 2022, following a sharp decline in 2021 when transactions dropped by 41.8% compared to 2020. In 2022, the Bank of Thailand reported a further decrease of 35% in real estate transactions, indicating a persisting decline in demand. Property values also dropped consecutively across the first three quarters of 2022, showing reductions of 1.48%, 2.25%, and 2.64%, respectively. The figures for the fourth quarter are still pending.

Luxury Real Estate Defies the Trend

While the overall market struggled, the luxury property segment showed a different story, with demand for high-end residences exceeding supply by the end of the year. This positive trend in luxury housing is expected to continue into 2023, making prime residential properties an attractive investment opportunity.

Condominium Sales to Foreigners

Sales of condominiums, which can be fully owned by foreigners, saw a slight decline of 3.8% over the year. By the third quarter, there were 38,687 transactions. In total, foreign buyers purchased 7,290 apartments in the first three quarters of 2022, with Chinese nationals leading the way, accounting for 48.5% of all foreign transactions. The United States and France followed with 4.4% and 3.9%, respectively.

Tourism Impact on Real Estate

In 2022, Thailand welcomed around 11 million tourists, a notable rebound from the pandemic lows but still below pre-pandemic levels. This recovery placed Thailand among the fastest-recovering countries. The Tourism Authority of Thailand expects up to 25 million visitors in 2023, with a significant portion expected to be from China. This rise in tourism will likely boost demand for both rental and investment properties, particularly in popular resort areas.

Real Estate Rental Income in 2022

Rental yields remained stable in key regions, with average annual returns as follows:

Bangkok: 4.45%

Pattaya: 5.51%

Phuket: 6.77%

Hua Hin: 5.65%

Newly constructed apartments offered even higher returns, making rental properties a lucrative option for investors in 2023.

Slowdown in New Construction

The construction sector showed limited activity in 2022, with fewer new projects entering the market due to lingering pandemic effects. However, demand for new developments is recovering quickly, with prices for new properties rising by 25-30% upon completion. This trend is expected to continue in 2023 as supply remains tight.

Key Market Trends for 2023

Foreign Ownership of Land:

Starting October 2022, certain categories of wealthy foreigners are allowed to purchase land in Thailand, provided they invest over $1.2 million in socially significant areas. This change could attract more foreign capital and stimulate demand in the high-end segment.

Branded Residences:

Branded residences are gaining popularity in Thailand, offering fully serviced apartments managed by reputable international companies. These properties cater to investors seeking a blend of luxury, convenience, and long-term residence options.

Increased Use of Cryptocurrency for Transactions:

Due to international transfer restrictions, some developers have started accepting cryptocurrency payments from Russian buyers, making it easier for them to invest in Thai properties despite financial constraints.

Outlook for 2023

Overall, 2023 is expected to bring new opportunities for the Thai real estate market, driven by the return of tourism, strong demand in the luxury segment, and increasing foreign interest. While the market recovery is still ongoing, positive developments indicate a more favorable environment for investors looking to capitalize on Thailand’s real estate potential.