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2022 Bangkok Real Estate Market Trend Forecast Analysis | Is it a Good Time to Buy on the Dip? | Will Foreigners Be Allowed to Buy Land and Villas? | A Must-Read for Buying Property in Thailand
In 2021, the trend of housing prices in Thailand was not as bad as expected. After a year of "anti-epidemic" measures, Thailand steadily advanced the overall recovery of the real estate market in 2021. Both rental prices and the housing price index showed an upward trend throughout the year, and as the pandemic gradually came under control, the upward trend became increasingly evident.
Moreover, changes in work patterns have occurred; previously, people worked five days a week in the office, sometimes even six days. After the spread of the pandemic, some companies adopted a shift system, alternating days for employees to work in the office. With more time spent at home, people's living requirements have changed.
Furthermore, Bangkok remains an attractive option for foreigners. Many are drawn to this vibrant city, and for foreign nationals, the cost of living in Thailand is relatively low. Once everything reopens fully, the demand from foreigners is expected to rise. The Thai Public Health Department also covered 80% of the local population with vaccine availability as of 2021, aiming to rebuild foreign buyers' confidence in a short period.
Although the pandemic's impact is still evident, particularly in the real estate industry, which is an indispensable element of human life, any changes in the market are felt quickly and noticeably.
The transaction volume in 2021 did not meet expectations, leading to reduced demand, and as a result, the supply of projects from major developers in Thailand has slowed down. However, for an international city like Bangkok that continues to thrive, the core value of housing still lies in the population and land. The scarcity of land and the constant influx of people remain the driving forces behind this hotspot for investment. Consequently, the "bottom-fishing" opportunities presented by the pandemic have actually heightened many investors' enthusiasm for investing in Bangkok.
In summary, the overall trend of housing prices in Thailand is steadily rising, although the pace has slowed, and there are more investors taking a wait-and-see approach. Nonetheless, overseas investors continue to maintain confidence and enthusiasm regarding the investment potential of the Thai real estate market. Our consultation rates remain high, with many inquiries coming from clients in various countries about real estate-related matters.
How is the Bangkok real estate market looking in 2022?
3-point investment strategy
1. Tourism Boom
Thailand's tourism industry is closely linked to property prices. Tourists bring money to spend, which often leads to the desire to stay in Thailand. For instance, while many cities in other countries experience harsh winters, Thailand enjoys summer all year round with sunny weather!
Despite the pandemic severely impacting Thailand's tourism sector, it remains the top destination for domestic and international travelers after the pandemic. According to research from Thailand, a survey targeting visitors from major Chinese cities showed that 71% of Chinese tourists are considering traveling to Thailand, with an intent to arrange overseas trips in 2021 or after the pandemic.
2. Favorable Policies
To attract foreign investments and boost the overall economic recovery, the Thai government continuously releases positive news. Investment enthusiasm in Thailand remains strong, particularly in retirement, investment, and healthcare markets, which have always garnered attention. The government aims to stimulate additional growth in the overall economic market by relaxing regulations.
In 2021, the most significant property news for overseas investors is the possibility that foreigners may soon be able to purchase land or villas directly.
Additionally, to attract more overseas elites to Thailand, the government has introduced new visas, such as a 10-year long-term residence visa (LTR) targeted at four categories of people and medical visas for healthcare travel and retirement. The 10-year long-term residence visa, in particular, eases restrictions on property investment for foreigners, in addition to a long-term elite visa that spans up to 20 years!
3. Developer Promotions
In 2021, facing the ongoing impacts of the pandemic, Thai developers did not remain passive; instead, they changed their sales strategies by offering price reductions on inventory to quickly recoup funds and costs, preparing for new projects and releasing demand.
Especially villa projects have become particularly popular among buyers due to shifts in consumption and living habits during the pandemic, leading to a heightened demand for improved living environments. Consequently, discounted villas are in high demand, presenting a great "opportunity" for both overseas buyers and developers.
Considering the above three investment strategies, let's look forward to the property investment market in Thailand in 2022.
4 Points of Future Outlook
1. The housing market may continue to be stimulated
This is something that most people may not have noticed: as the end of the year approaches, the Bank of Thailand has relaxed the LTV mortgage limit, stimulating the recovery of the housing market. Developers are also gearing up by offering discounts to clear their inventory, preparing to raise funds for new projects, aiming to leverage the favorable policies and boost transaction volume and value in 2022.
Thailand's policies directly affect the development of the real estate business, and we have been monitoring the government's stance. The Bank of Thailand has relaxed LTV mortgage limits, which are effective for housing loan agreements from October 20, 2021, to December 31, 2022. It designates the maximum LTV ratio for housing loans as 100% (allowing borrowing based on the full value of collateral), including loans for purposes other than purchasing homes, such as buying furniture and appliances for new homes or renovations. For collateral valued below 10 million baht, this applies from the second loan agreement; for collateral valued at 10 million baht or above, it applies from the first loan agreement.
This temporary relaxation of the LTV mortgage regulation will help bring new capital into the economy via real estate and related businesses, which account for 9.8% of GDP and support 2.8 million jobs. In the coming year of 2022, the housing market may continue to receive stimulation to aid Thailand's economic recovery.
2. The rental market will become more vibrant
Due to the impact of the pandemic, overall purchasing power has declined, leading to an increase in the number of people choosing to rent. For overseas investors, now is an opportune time to acquire apartment projects suitable for long-term rentals, provided these apartments are located within a 1.5-kilometer radius of convenient transportation and accessible metro networks, in areas with a large population of white-collar workers or students. During the pandemic, our company has been able to rent out approximately 70 houses on average each month.
Overseas investors purchasing properties in Thailand will need to ensure long-term management even when they are not in Thailand.
In addition to the increasing number of renters, Thailand is facing a high level of household debt, with current household debt reaching 90% of GDP. Renting will likely become more popular. For the relatively weak purchasing power of the younger generation, the concept of single living or not wanting to have children for an easier lifestyle—and a shift in consumer perspective valuing enjoyment of life, travel, and not wanting property to become a burden—will result in a significant increase in rental demand. However, mindsets will change over time, and the key issue is that housing demand remains a challenge as the population grows.
3. Villas garnering attention
Due to new working models prompted by the pandemic, working from home is becoming a new way of life, leading to higher demands for home environments and space. People are looking for larger plots of land, three to four bedrooms, private swimming pools, and good community environments. Villa properties will become a primary target for property investors. As long as the global pandemic is not completely under control, home office arrangements, remote classes, and entertainment will become more common, and villa properties will receive increasing attention. Additionally, one advantage of villas is that there is no need to share elevators with others, which reduces the risk of infection, and villas in Thailand are exceptionally beautiful!
4. Purchasing homes with digital assets
Currently, digital assets have a tremendous impact on Thailand's younger generation, with cryptocurrency real estate purchases becoming a new trend. Compared to the previous generation, they prefer buying cars and houses. In May 2021, Thai property developer Ananda announced a partnership with the Bitkub trading platform, allowing clients to use Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) to pay for apartments and residential projects.
This indicates that digital currencies are officially entering the real estate transaction payment scene in Thailand, which is expected to inject new vitality into the real estate trade.
The demand for rental housing will expand in 2022. How should one choose a suitable rental apartment?
Based on my previous experience with renting, I first confirm the main area where I will be active, and then start searching for properties nearby according to my budget. If I'm not sure what properties are available in the vicinity, I can use Google Maps or enter the name of the area along with "condo" online to find a lot of relevant information. For information in Chinese, you can refer to our Chinese rental website (www.throne-property.com).
The demand for villa properties is becoming increasingly popular, so where should you strategically invest early?
In Thailand, there are villas with both low and high total prices. For instance, some developers specialize in building villas that maintain their value very well. Moreover, some villas have changed hands two or three times and are sold within two to three years. Therefore, the first key point is that choosing the right brand is very important!
As for location, most people who live in villas own cars and do not reside near BTS or MRT stations. What most people consider are the living amenities nearby, such as supermarkets or markets, followed by schools, as families with children also need to be concerned about education. Thus, the second key point is to look at the future planning of the area, living amenities, and schools.
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