Why: Thailand Real Estate is a Buyers Market?
When is the optimal time to find an entry point and start to invest in something? Of course, the word something in investment can vary. You can invest in bonds, commodities, stocks, currency, real estate, and a slightly new phenomenon in cryptocurrency. You hear about buying low and selling high for new investors, but does it work with real estate or the property market.
As the world went to lockdown because of the uncontrollable and unpredictable virus two years back. Economics and policies across the globe went into disarray. Everything went into complete shutdown and confusion. All kinds of businesses have to close down or ask for loans from banks. Investors and property dealers’ decision-making purchases on high-end products were considerably slowed in purchasing. Or even some essentials home products demand skyrocketed during the pandemic. But how about investments in real estate. Investments into a home or shelter for yourself to live or for investments opportunities.
Southeast Asia has become a significant hub for foreign direct investments. When the region opens up in the late 20th century and early 2000s, foreign investments came from all over the globe. The new attraction, the unchartered territories in Southeast Asia, was up for growth with rapidly growing global economic powerhouses. Yet, fast-forward to 2021, foreign investments had decreased, the currency had weakened, and economic growth had stalled and reversed. Nevertheless, it is still a proper time to invest in real estate in Thailand, even with uncertain policies or financial gains and policies.
Growing Rental Yields
Thailand always had the appetite to lure in high-skilled workers, wealthy investors, and globally wealthy retirees. Since the big boom of the real estate market in 2018, especially luxury condominiums brought in new direct investments in a growing economy. On the other hand, property developers did not shed light outside central Bangkok.
In the past, investors were also reluctant to purchase property at a premium price. But the real estate market was booming. Property developers advertised new developers on billboards, newspaper advertisements, and even pop-up sales booths in shopping malls. Of course, in any business, any new developer’s launch creates ripple effects of prices. But investors were still flowing into Thailand as the market was for everyone and had great potentials.
As for 2021, when confidence in the market is at its lowest and prices are at discounts, it creates more rental yield than the previous market. For example, when an investor is purchasing a property at a discount price of 20-30 percent, it will generate greater rental profits in the future. Respectively from 5.6 percent outside central Bangkok to 7% and in central Bangkok from 8%, it will increase to around 11% of rental yields per month. According to Bangkokpost.com, top property developers will see a rebound of luxury condos returning during Q4 of 2021 and the first half of 2022. The luxury condo market will rebound as investors’ first image pops up about Bangkok’s stylish condominiums.
When the word “old” pops up, everyone has an opinion on what “old” can be in years. For some, old can be like three years, or even 20 years can be considered old. But how about the property market? How many years has it been before it can become an “old” property? In Thailand, the real estate market can say a property considered “old” is around ten years. Before 2015 when real estate took off, property in Thailand was not as stylish or modern as in the current market.
Surrounding countries, especially China, influenced Thailand’s culture, traditions, and lifestyle back then. Many mansions (apartments) were constructed with wood, and the apartment architect had a monarchy type of furniture and felt too it. The styles, designs, and infrastructure of real estate did not have the modern touch and ingredients. With the ongoing pandemic, a new plan has to be made, especially in the resale market.
Bangkok resale and secondhand homes have risen during the pandemic. As a result, investors locally and internationally have to look into secondary homes to find good deals in times of the pandemic. According to Bangkokpost.com, secondhand homes purchases have risen steadily, and presales account for almost 50 percent of transactions. Secondary homes increased because investors want a good deal in times of uncertainty. During times of uncertainty, people tend to save cash for unpredictable events. But with secondhand homes, prices are reasonable.
Lastly, previous tenants renovated secondhand homes to have a modern and stylish look as developments from 2015. Of course, prices are still more reasonable than property developers, but secondary homes will give investors rental yield with a modern look.
When the real estate market was booming, and a period of continued optimism, one significant occurrence concur was how property developers were not looking at what the market wants. Property developments occur mainly in Bangkok Central Business District. Top developments put their focus on launching new projects as sales and investments coming in all regions. Thailand’s real estate market is known to advertise optimism and positive energy. What happens with the pandemic is changing property developments outlook.
Now, developers have to look at what the market wants and needs. Instead of just flushing out new projects monthly without any data-driven market research does not justify where a new project will be. Such as Origin Developments, which has a last look into central Bangkok, has more recent projects in quarter 4 of 2021 to outside central Bangkok. The market has shown that investors and the market want space in their new homes. Ample space where they can have a family but also space to work remotely. Recently on Bangkokpost.com, Singha real estate projects emphasize luxury low-rise projects to be launched end of 2021.
Thailand has a wide range of property developers in the country for all field sites of income investors. Recently, new projects are meticulously planned to what markets needs are in a home.
Overall, the forecast of the property market, according to knightfrankthailand.com, is respectability going to be around 10.7% during the second half of 2021. On the other hand, according to Bangkokpost.com by Prusha developers, the real estate market will be a slow up-tick at the end of 2021 but will rebound in 2022. The rebound in the real estate market occurs because of houses, single houses, townhouses, and detached houses; sales rise during the pandemic. A change in the real estate market in Thailand emphasizes how people want more space and not to be in the city. House sales rise to 36% during the first half of 2021 and continue to grow.
Nevertheless, Thailand’s real estate market is saying changes with how new projects are not launching yet. Not just in Bangkok, where the property market is stalling and waiting, but in Phuket, or Pattaya, where investors are finding a suitable entry point in the market. Emphasis on unsold inventory at discounted prices to greater rental yields and new projects driven by market research, Thailand real estate market is a buyers market and a holding market. Investments in real estate are meant to be a long-term investment and asset diversification; Thailand is genuinely adapting to a long-term investments real estate market.