How has the real estate situation in Thailand changed in 2023?

Growth of the real estate market in Thailand

In 2023, the real estate market in Thailand demonstrated an impressive growth in the number of transactions, increasing by almost 50%. This trend encompasses various segments, and buyers have shown interest in a range of properties. In this article, we will thoroughly analyze the latest changes in the market, the rapid rise in housing prices in different regions of the country, optimal directions for potential investments, as well as various forms of property ownership.

Forms of property ownership in real estate

Nuances of owning real estate in Thailand their features. For foreign citizens seeking to purchase housing in this South Asian state, two main forms are available:freeholdandleaseholdIn the case of free ownership form (freehold) foreign buyers may fully own an apartment in a condominium, where individual units become jointly owned and common areas are shared. However, most apartment transactions in condominium buildings are done through long-term leases (leasehold).

Purchase of a villa and ownership rights

If a foreigner is looking to purchase a villa with land, they will only be able to own the building itself, while the land can only be acquired through a long-term lease of up to 90 years. To gain full control over the land, foreigners are indeed encouraged to establish a company in Thailand, which allows for complete ownership.

• With the share of foreign capital in such company not exceeding 49%.
• Investing a minimum of 40 million baht (approximately 1.1 million US dollars) in projects approved by the investment council.
• The right to acquire up to 1600 square meters of land.

Dynamics of transactions and average prices in real estate

According to data provided by the Bank of Thailand, in 2023, the total cash transaction volume of real estate transactions amounted to 951.54 billion baht (about US$26.6 billion), up 20% from last year. The highest value of transaction volume was recorded in the central part of the country, while the largest increase was seen in eastern Thailand, where the number of transactions increased 1.5 times.

Adjustment of the number of transactions

Overall, during the reporting period, the number of transactions increased by 43%, exceeding 150,000. It is particularly important to note that about 93% of all transactions involve residential real estate, highlighting the significance of this sector in the market.

Conclusion

Thus, studying the real estate situation in Thailand in 2023, it can be noted that interest in various types of properties has increased, creating new opportunities for investment and home purchases. Considering these trends, many potential investors should pay attention to the properties that interest them and keep an eye on changes in the ever-evolving market.

Growing interest in commercial real estate

According to recent statistical data, there is a noticeable increase in interest in commercial real estate. The volume of transactions in this sector has increased by 7.6 times compared to the figures from 2022. It is also worth noting that the number of transactions involving land plots has doubled over the past year. The main players in the real estate market in Thailand are Russians, as well as investors from mainland China and Hong Kong. We should not forget about significant participants such as those from the United States, Singapore, Taiwan, Japan, and the United Kingdom.

Housing prices in Thailand

To get a clearer understanding of real estate prices in Thailand, we will analyze three key cities:

• Bangkok

  In the central areas of Bangkok, the cost of housing per square meter is193,043 bata.that corresponds to approximately5411 US dollarsIf we look at the outskirts of the city, prices drop significantly to88,894 bahtabout$2,492.).

• Nonthaburi

  In this area, you'll have to pay for housing in the center.97,500 baht(or2733 dollarsOn the periphery, the cost increases to100,000 baht (2803 dollars).

• Pattaya

  In the central parts of Pattaya, the cost per square meter is63,833 baht($1,789), while outside the city limits the price drops to a42,400 baht(1188 dollars).

(Data is current as of March 15, 2024, source: Numbeo.)

The process of acquiring real estate in Thailand

Now let's take a look at the step-by-step process of buying real estate in Thailand:

• Search and lawyer

  Given the insufficient regulation of the real estate market in this country, it is crucial to consult a professional lawyer. This will provide greater protection for your rights compared to a regular realtor.

• Housing reservation

  When signing a reservation agreement, it is necessary to specify all the important details of the parties, as well as the characteristics of the object. In this document, the data of the participants and the deadline for making a deposit are fixed. The buyer is obliged to deposit1% of the total property valueas a deposit, which temporarily removes the property from sales. The deposit can be made either in cash or by bank transfer to the seller's account.

• Legal review

  At this stage, it is very important to engage a certified lawyer who will conduct a comprehensive review of all legal aspects. They should pay attention to the developer's status, the condition of the property, as well as any encumbrances and legal disputes involving third parties.

• Sales Agreement

  After making the down payment, the next step is to sign the main contract. It should include all the terms of the deal, the forms of documentation, any potential additional costs, as well as penalties for breach of obligations.

• Payment for the purchase

  In Thailand, there are two methods of calculation:

  • In the case of purchasing a new building, payment is made by transferring funds to the developer's account specified in the contract. This can be done from any account registered in the buyer's name, even if it is located outside the country. Payment is also available on behalf of a legal entity, of which the buyer is the founder.
  • When purchasing secondary real estate, it will be necessary to open a bank account in Thailand to transfer funds from a personal account located in another country.

Conclusion

Thus, the process of acquiring real estate in Thailand is a multi-step procedure that requires careful attention to legal conditions and various aspects of the transaction. A proper strategy for conducting the deal will help avoid many problems and ensure reliable protection of your financial investments in this world-renowned location.

Real estate registration process

During the property registration process at the Land Department, the buyer is required to provide a receipt for the agreed amount to the seller. This step is crucial, as it is essential for the funds to be transferred from abroad when registering ownership rights at the basic level (freehold). The Land Department pays special attention to this aspect to ensure the legality of all actions.

By the way, when it comes to real estate being arranged under the principle of long-term lease (leasehold), the buyer is free to choose the payment methods — they can use various methods. Interestingly, in Thailand, it is legal to purchase property using even cryptocurrency.

Stages of registration

After all financial transactions are completed, the registration of ownership or long-term lease begins at the Land Department. At this stage, the presence of representatives from both the seller and the buyer is necessary. Typically, the closing process takes between 30 to 60 days, depending on specific conditions and nuances.

Additional expenses

When making a decision to purchase real estate in Thailand, it is important to consider additional expenses that may arise during the process. First of all, the transfer fee ranges from 0.01% to 2.00%, and it is paid by the buyer.

When purchasing real estate in Thailand, it is important to understand that the initial down payment ranges from 30-40% of the total property value. The remaining 60-70% can be financed through a bank loan. As of today, the average interest rate for a 20-year fixed-rate mortgage is 5.41%. This rate may vary depending on the economic situation and the borrower's preferences. Buyers also have the option to obtain an installment plan directly from the developer, which can be interest-free during the construction phase, and after the completion of the property, it may be 3-5% per annum on the remaining amount.

Investment directions in real estate

Speaking about investment opportunities in real estate, Alexander Chernokulsky, director of the "Zhilsfond" company, noted that investors are increasingly turning their attention to the mainland of the country against the backdrop of the growing market in island Thailand. Thailand is attractive for investments due to the steady increase in residential property prices. For example, investing in condominiums during their construction phase can lead to a price increase of almost 50% by the time the project is completed. Additionally, after the final construction or purchase of secondary housing, investors can earn rental income.

Real estate rental market

The rental market in Thailand shows high profitability, but it varies by region. For example, rental income from properties in Phuket significantly increases during the high tourist season, although it decreases during the off-season. In major cities like Bangkok, Pattaya, and Chiang Mai, seasonal fluctuations are less pronounced.

• In season, renting a long term apartment can cost 20,000 baht (about $560).
• In the off-season, it's up to 15,000 baht (about 420 dollars) due to the increased supply in the market.

Scientific research and results

According to a study conducted by Global Property Guide, in the fourth quarter of 2023, rental yields for apartments in Phuket ranged from 5.45% to 6.45% depending on their location and size, with an average of 5.87%. In Bangkok, the yield level ranged from 2.19% to 9.52% (average 4.88%), in Pattaya from 3.24% to 10.04% (average 6.25%), and in Chiang Mai from 5.5% to 7.28% (average 6.32%).

Future prospects

According to our forecasts, in 2024, resort cities like Pattaya, which is actively developing, will become particularly attractive for investment, and the housing market in this region will maintain affordable prices. By 2026, the construction of a new airport near Pattaya is expected to be completed, which will become an important transportation artery, relieve Bangkok, and attract more tourists to Pattaya. Additionally, as part of the transportation infrastructure between Bangkok and Pattaya, which are only 150 km apart, a railway is being built that will reduce travel time to just 30 minutes.

Conclusion

In conclusion, analyzing the real estate market situation in Thailand in 2023, it becomes clear that the increase in transactions and interest in these assets is not coincidental. A 20% increase in turnover and nearly a 50% growth in the number of transactions indicate that the country is becoming increasingly attractive to foreign investors and the local population. This period highlights the growing interest in both residential and commercial real estate, which reflects the diversity of demand and investment opportunities.

I have looked in detail at the forms of ownership in the country and noted that foreigners can engage in investment in a variety of ways. The variety of ownership types, such asfreeholdandleaseholdIt may seem complicated, but a deep understanding of these nuances opens up wide horizons for future investments. Just imagine how relevant this information is for those planning to explore the Thai market!

The price categories I examined depending on the region show how diverse the market is against the backdrop of overall growth. Every city, whether it is...Bangkok,NonthaburiorPattayaoffers unique conditions for buyers, which is also important to consider when choosing a place for investment.

Key steps when buying real estate in Thailand

• Hire a lawyer
• Conduct a legal review
• To properly conclude a contract

Not excluding the significance for the market of foreign investors, Russians and citizens of other countries continue to be active, which is especially noticeable in the crisis in other regions. Investing in Thai real estate is becoming not only exciting, but also a reliable way to preserve and multiply capital.

Ultimately, based on the research and the provided analytics, I can confidently say that 2023 has been a landmark year for the real estate market in Thailand. Considering all factors, including economic stability and the region's attractiveness, we can expect further growth and expansion of investment opportunities not only in the current year but also in the future. Thailand not only maintains its reputation as a vacation destination but also competes confidently in the global real estate market.