Real estate sector growth due to foreign buyers

Foreign buyers will drive growth in Thailand's real estate market in the second half of this year, but domestic buyers have yet to fully recover their purchasing power due to unfavorable factors, real estate appraisal and consulting agencies said.

The Thai economy has shown signs of improvement due to foreign buying power, especially after China's opening up, and the country's tourism sector as well as selected businesses are experiencing recovery and growth. The Fiscal Office of the Ministry of Finance predicts Thailand will welcome 29.5 million tourists in 2023, generating Bt1.3 trillion in revenue for the country. However, rising interest rates, inflation and political uncertainty are still hampering growth in the real estate sector.

The Real Estate Information Center (REIC) of the State Housing Bank reports that the number of apartment transfers by foreigners nationwide rose 79.2% to 3,775 units and the value of such transfers rose 67.6% in the first quarter of 2023 compared to the same period last year. The total value of transfers by the end of the first quarter amounted to 17.1 billion baht. This reflects a positive trend in the recovery of the real estate market after the country's opening up, allowing foreigners to travel and engage in real estate transactions and transfers in Thailand as before.

Arithaya Kasemlawan, head of real estate sales and investment for CBRE (Thailand) said that last year and up to the beginning of this year, 89% of clients were Thai and the remaining 11% were foreigners, most of them from China, Hong Kong, Taiwan, Myanmar, Singapore and Japan. The agency noted a healthy increase in the number of foreign buyers since the beginning of this year.

Sopon Pornchokchai, president of the Real Estate Affairs Agency (AREA), said foreign buyers are expected to account for 15 percent of the total property value or about 10 percent of the total number of transfers, with foreigners buying increasing to about 18 percent of the total number of properties sold in the next two years. AREA predicts that 111,273 properties will come on the market this year, representing a 5.3% increase over last year. The value of real estate in 2023 will be 478.61 billion baht, up 6% from 2022. Sopon added that only 60 percent of the total purchases are for actual residence, 22 percent are for speculative investment by Thai investors, and the remaining 18 percent are for foreigners to purchase for both residence and investment. "If speculative investment continues to rise and the proportion of genuine buyers decreases, it could lead to market problems and a downturn in real estate," he warned.