LPN Wisdom predicts a 30-70% decrease in new residential project launches in 2020 compared to 2019, due to reduced purchasing power and uncertainty in the recovery of the Thai economy affected by the COVID-19 pandemic.

Mr. Prabhan Sak Raksaiwan, Managing Director of LPN Wisdom and Solutions Co., Ltd. (LPN Wisdom), a research and development company in the L.P.N. Development Group, stated that the COVID-19 outbreak from January to the present has directly impacted the country's economic growth. Recently, the Bank of Thailand revised its economic growth forecast from an expected growth rate of 2.8% down to a contraction of 5.3% (not including government stimulus measures yet to be announced).

The economic slowdown has directly affected domestic purchasing power and the growth of the real estate business, leading to a downward trend in new residential project launches by real estate developers in 2020. Consequently, LPN Wisdom has adjusted its forecast for new project launches in the Bangkok metropolitan area, predicting a decrease of 30-70%, depending on the economic recovery, with three scenarios outlined:

  • In the scenario where the COVID-19 outbreak subsides in the second quarter of 2020 and the economy recovers in the third quarter of 2020, LPN Wisdom expects the number of new project launches in 2020 to be between 70,000-75,000 units, valued at 250,000-270,000 million baht, representing a 30-35% decrease compared to 2019.
  • In the scenario where the COVID-19 situation improves in the third quarter of 2020 and the economy recovers in the fourth quarter of 2020, LPN Wisdom expects the number of new project launches in 2020 to be between 50,000-55,000 units, valued at 175,000-190,000 million baht, representing a 50-55% decrease compared to the same period in 2019.
  • In the scenario where the COVID-19 situation extends until the end of 2020, LPN Wisdom expects that in 2020 there will be 35,000-40,000 new residential units, valued at 120,000-135,000 million baht, representing a 65-70% decrease compared to the same period in 2019.

In the first quarter of 2020, real estate companies launched a total of 66 new projects, a 23% decrease from 86 new projects in 2019, resulting in 17,180 new units, a 38% decrease compared to the same period in 2019, with a total project value of 61,950 million baht, down 27% from 86,359 million baht in the first quarter of 2019.

The trend of new project launches by real estate developers in the first quarter of 2020 focused primarily on low-rise projects, resulting in 8,630 units of single houses, duplexes, and townhouses, an 11% increase compared to the same period in 2019. Meanwhile, the launch of condominiums in the first quarter of 2020 totaled 8,512 units, a 56% decrease compared to the same period in 2019.

Locations for new condominium projects in the first quarter of 2020 were along the Blue Line (circle line) which connected at the end of 2019, and along the Yellow Line, Lat Phrao-Srinakarin-Samrong, which is set to open in 2021. Low-rise projects were primarily located in the Rangsit-Pathum Thani and Bang Na-Srinakarin areas due to convenient transportation routes.

"The COVID-19 outbreak has made developers cautious about launching new projects due to operational limitations under the current circumstances. However, in recent times, real estate developers have adjusted their sales strategies by increasingly utilizing digital technology for marketing and sales communication, creating new business opportunities for developers. If this strategy receives a positive market response, it could change the sales strategies of developers during the crisis and may improve their confidence in launching new projects, which is something we need to keep an eye on," said Mr. Prabhan Sak.