The annual discussion event 2022 "Bangkok Quadrant: Transforming Bangkok for a New Era - Where is Real Estate Headed?" took place on September 21, 2022, organized by Prop2morrow Co., Ltd. to gather insights on trends in the real estate sector and legal issues affecting the growth of the industry.

Real Estate Calls for Government to Accelerate Infrastructure Development to Reduce Congestion and Decentralize Cities Towards a Grassroots Economy

The Chamber of Commerce pointed out that the hope for a rail system with 500 stations by 2029 is a turning point for real estate to accommodate a decentralized urban growth, reducing congestion and improving access to housing. SCB revealed that demand for properties priced between 1-2 million baht and second-hand homes is strong, while concerns arise over townhouses and duplex homes priced between 3-6 million baht remaining in stock. Factors pressuring the market include inflation and household debt, which hinder purchasing power, prompting recommendations for the government to maintain LTV measures and reduce transfer burdens.

Big developers are worried that people's dreams of homeownership are at odds with their financial capabilities, suggesting that the government should develop housing for 2,700 overcrowded communities as a crucial economic foundation to stimulate grassroots real estate. The president of the Thai Condominium Association emphasized Thailand's potential as a health hub to attract foreign businesses, tourism, work, and retirement.

Mr. Isara Boonyang, Chairman of the Real Estate Business Group and Construction Trade Association of Thailand, and Honorary President of the Housing Development Association revealed the overall real estate market in Bangkok and trends for 2023, stating that the development of the rail system will be a significant factor in transforming real estate in Bangkok for the first time in 70-80 years.

Traveling by car is expected to increase from over 100 stations currently to 500 stations by 2029, which poses a challenge for the government to prepare for systematic public transport development, thus promoting investment in housing development.

At the same time, urban planning should be improved to promote the decentralization of the city center throughout Bangkok, which is set to be announced in the next two years. This will significantly influence investors' decisions. If the existing model remains largely unchanged in suburban areas, improvements will be crucial for developers' investment decisions. Adjustments are needed in the floor area ratio (FAR) to allow for expansion in nearby areas, which will help reduce density and promote urban distribution.

Condominiums are experiencing a 200% growth compared to last year.

New project launches this year have increased across all categories, with condominiums seeing a growth rate of 200% compared to last year (2021), marking the highest growth in a decade since the flooding in 2011. This has positively impacted the condominium market, while horizontal properties have increased by 14%. Overall, it is expected that the number of real estate units and value will grow by no less than 5% compared to last year.

“The COVID-19 pandemic over the past two years has caused the real estate market to grow slower than the economy, but it is fortunate that there are still property transfer transactions.”

Although condominium transfer volumes have decreased somewhat, the decline is not significant. This year, it is expected that transfer volumes will remain stable. If the economy recovers, it can be sustained. Factors that will stimulate home buying decisions include extending property promotion measures, which will help stabilize the economy, such as waiving transfer and mortgage fees. Meanwhile, the second-hand home market is expected to grow better each year, benefiting from reduced consumer purchasing power and the need to address NPLs of financial institutions,” Mr. Isara stated.

For the trend of property purchases to recover, new markets should be opened to foreign markets, including easing regulations for foreigners to own land and implementing long-term visas to stimulate the overseas market's expansion, leading to the return of tourists, which is a straightforward way to boost the market.

Mr. Isara Boonyang, Chairman of the Real Estate Business Group and Construction Trade Association of Thailand views Bangkok and its suburbs as having public utilities that originally involved cutting canals to manage water flow, such as the Saen Saeb and Rangsit canals, to connect the Chao Phraya River - Tha Chin and Chao Phraya - Bang Pakong rivers for agriculture, transportation, and flood prevention, including the Klong Lat Pho floodgate in Bang Kachao to help reduce tidal flooding. This has led to the development of public utilities through road construction, causing communities, homes, and temples that used to be along the rivers to move into alleys, resulting in new forms of public transport, such as motorcycle taxis, alongside the development of rail systems.


Mr. Isara Boonyang, Chairman of the Real Estate Business Group and Construction Trade Association of Thailand

Thailand can be considered a single central country. Even though some government agencies have been decentralized to other areas, Bangkok remains the central hub. The TOD (Transit-Oriented Development) resolution has been in place since 2016, modeled after Japan and the United States, which promotes land development around transit stations based on the following concepts:

1. Land around stations should be used for mixed-use development.
2. Land around stations should be developed compactly.
3. Land around stations should provide all necessary services within walking distance and have a pleasant walking environment.
4. Land around stations should offer diverse transportation options, including trains, buses, pedestrian paths, and bicycle lanes, along with bike storage.

Factors Influencing the Direction of Real Estate in 2022-2023 include government measures that should be extended, such as:
Fiscal measures reducing land transfer fees from 2% to 0.01% and mortgage fees from 1% to 0.01% for residences priced below 3 million baht in 2022, which also applies to second-hand homes, effective from January 18 to December 31, 2022. Additionally, purchasing residences without a down payment is allowed, but loan approval still depends on the borrower's ability to repay.

Although current interest rates are very low, a real interest rate increase of just 1% can significantly impact loan repayments by 6-7%, reducing borrowing capacity. However, in reality, interest rates have less impact on borrowing capacity than household debt. For inflation in Thailand in 2022, it is expected to peak in August at 7.86%, while the minimum wage has increased by an average of 5%. Labor costs have less impact than construction material prices and oil prices, as well as land tax factors. For legal entities, the tax is 100 baht per million for agricultural land, while for other areas, it is 3,000 baht per million.

Regarding the purchasing power of foreigners

1. Announcement from the Board of Investment: BOI (6/2022)
- Foreign entities receiving investment promotion must have a registered capital of at least 50 million baht.
- They can own land for office use up to 5 rai.
- Executive accommodation must not exceed 10 rai.
- Workers' housing must not exceed 20 rai.
- They must sell or transfer the land within one year after losing their promoted status.
- Such announcements have been continuously enforced retroactively for 1-2 months.

2. Existing laws

3. Government policies supporting foreign home purchases for four groups:
- Wealthy global citizens
- Foreign retirees aged 50 and above
- Professionals working from Thailand
- Highly skilled professionals
4. Long-term visas from 14 countries under specified conditions.

Living behaviors and trends of urban dwellers

1. The COVID-19 situation and other epidemics have increased the demand for space and diversity in living areas (Space Matters)
- For Work From Home
- For Learn From Home
- For Holiday At Home
2. Technology, innovation, and various applications (Smart Living)
- Functions for convenience
- Functions for safety
- Materials and equipment that reduce energy consumption
3. Addressing sustainability (Sustainable Living)
- Reducing energy consumption
- Using alternative energy
- Reducing pollution in residences
4. Trends for the elderly (Aging Society)
- Designing usable spaces (Multi-Generation)
- Equipment for convenience
- Technology and safety for daily living.

SCB indicates that demand in the 1-2 million baht segment continues to grow, while concerns arise over townhouses and duplex homes priced between 3-6 million baht remaining in stock.
Mr. Chethawat Songprasert, an analyst at the Economic Intelligence Center (EIC) of Siam Commercial Bank Public Company Limited (SCB), views the real estate market this year and next year, noting that the economic situation is starting to recover, leading to market growth compared to last year, with sales increasing by 30%. The segment that continues to perform well is condominiums priced between 1-2 million baht, while horizontal properties, such as duplexes and townhouses, are seeing negative trends. The segment expected to turn positive is single-family homes, with projections for 2023 indicating continued gradual sales growth, particularly in the low-priced condominium market, while single-family homes priced between 6-10 million baht are still performing well.


Mr. Chethawat Songprasert, Analyst at the Economic Intelligence Center (EIC) of Siam Commercial Bank Public Company Limited (SCB)

Regarding property transfer volumes, it is anticipated that both value and units will increase by 4-5%, with the potential to rise to 10%. The transfer volumes for first-hand properties, including condominiums and townhouses, are recovering but remain below pre-COVID-19 levels.

“EIC inquired about consumer demand and found that the majority prefer horizontal properties, accounting for 40%, with price levels not exceeding 3 million baht. This reflects that buyers genuinely prefer horizontal properties, but purchasing power leads them to choose condominiums initially and expand later,” Mr. Chethawat stated.

The market that has shown significant growth this year is the second-hand housing market due to its affordability in locations similar to new properties, indicating interest because of lower price factors in the same area. Condominiums, single-family homes, and duplexes were previously in high demand before the COVID-19 outbreak and continue to be so to this day,” Mr. Chethawat added.

Positive factors for the economy next year are expected to improve as domestic purchasing power recovers. If the government implements measures to stimulate sales through easing loan-to-value (LTV) ratios and extending the reduction of transfer and mortgage fees, along with investments in infrastructure from the government, particularly the extension of the electric train, it will encourage investment in real estate.

Conversely, negative factors that hinder real estate growth include high inflation and household debt, which impact the purchasing power of the public and construction costs. Caution is needed regarding the high stock levels exceeding demand, and next year’s new launches will add to the accumulated stock in the market, particularly for townhouses priced between 2-3 million baht and single-family homes priced between 3-5 million baht.

Trends influencing investment decisions and purchasing power include an aging society, technology, hybrid working, and social and environmental business practices, which are trends consumers are seeking from developers (ESG).

2022: Expected to show good growth driven primarily by the expansion of the low-priced condominium segment as purchasing power gradually recovers, while horizontal properties are expected to grow gradually.
2023: Expected to continue growing at a slower rate than the previous year as purchasing power remains in recovery, leading to sustained interest in low-priced condominiums, while townhouses priced mostly below 5 million baht and duplexes priced below 5 million baht are expected to recover more, and single-family homes are also expected to show good growth.

New residential units launched in the first eight months of 2022 have shown good growth, particularly in the 1-2 million baht condominium segment. It is anticipated that the number of new residential units sold and the first-month sales rate for the entire year 2022 will recover significantly in line with new project launches by developers, the recovering purchasing power, and the low base from the previous year.

2022: New residential units are expected to show good growth as a result of increased new project launches, recovering purchasing power, and a low base from the previous year, particularly in the 1-2 million baht condominium segment, which is expected to receive continued positive responses throughout this year and potentially into next year. The first-month sales rate for new residential units in 2022 is expected to recover significantly compared to the previous year.

The overall purchasing power in the housing market remains fragile, along with concerns about rising expenses, leading most potential buyers to focus on properties priced below 3 million baht, followed by those priced between 3-5 million baht. Nevertheless, the majority of consumers still prefer horizontal properties.

Property ownership transfers in 2022 are expected to recover in line with the economic situation and purchasing power, especially from single-family homes, duplexes, and second-hand properties, which have shown significant growth. It is anticipated that ownership transfers will continue to expand in 2023.

Sena Development Indicates Oversupply Contradicts Market Prices, Urges Urban Planning Adjustments to Provide Stable Housing for Overcrowded Communities

Associate Professor Dr. Kessara Thanyalakphak, Managing Director of Sena Development Public Company Limited, stated that overall demand this year remains lower than supply, leading to an oversupply situation. The market that is selling well is the segment priced between 1-2 million baht, prompting Sena to expand its condominium market in this price range instead of townhouses. It must be acknowledged that consumer demand does not align with the products that developers can produce for the market due to rising costs of land and construction materials, while the purchasing power of the public remains in the lower price segment, which is a significant factor hindering market growth.


Associate Professor Dr. Kessara Thanyalakphak, Managing Director of Sena Development Public Company Limited

If the government wants to change the real estate market to decentralize urban centers throughout Bangkok to develop housing prices that meet people's needs, urban planning must be adjusted to promote decentralized development around Bangkok, which will help slow down land prices, a crucial cost factor.

Another approach is to develop projects in overcrowded communities to accommodate the approximately 2,700 overcrowded communities in Bangkok, all of which are located in good areas. This represents a significant labor market that can respond to urban development needs. Therefore, the government should find ways to develop housing for those earning less than 20,000 baht per month, or homes that low-income individuals can afford at around 300,000 baht, and create an ecosystem that develops these individuals as a crucial economic foundation in the city.

“Changing urban planning could lead to changes in the economy and land prices that are no longer the same. While it may not be possible to reduce land prices, it will help slow them down and is better than taking no action at all. Homes and condominiums priced below one million baht have a market, but developers cannot develop them. Therefore, we must find ways to develop homes that are as accessible as possible to low-income groups,” Associate Professor Dr. Kessara stated.

Origin Suggests Attracting Foreign Residents to Make Thailand a Wellness Hub and Develop Affordable Leasehold Apartments for Low-Income Individuals
Mr. Pirapong Jarunek, President of the Thai Condominium Association, stated that in an era where real estate operators face overlapping crises from the COVID-19 pandemic to the Russia-Ukraine war, along with changing economic power dynamics from the US and China, Thailand must find a suitable balance. In the current era, as Thailand faces an aging society, it should leverage its strengths as a country with an open culture to attract people from around the world, fostering good relationships to boost tourism. Therefore, it should attract people to live in Thailand, including skilled workers, tourists, laborers, and retirees, to gain an advantage in drawing people globally to contribute to the country's economic growth. Additionally, real estate developers should collaborate with health businesses to promote Thailand as a health hub.


Mr. Pirapong Jarunek, President of the Thai Condominium Association

Thailand should be open to all nations, including Europe, the US, and China, especially China, which was a major customer before COVID, interested in purchasing real estate in Thailand and seeking to invest, leading to residency, medical treatment, and second homes. Therefore, laws should be developed to support long-term residency.

Regarding the real estate market post-COVID, it must be acknowledged that prices have decreased to levels comparable to five years ago, even though land prices have not adjusted, particularly in central urban areas, which have increased by 20%. This presents a challenge for real estate businesses in project development. Even the development of suburban projects, which previously averaged no more than 20,000 baht per square meter, has now risen to 30,000-40,000 baht per square meter, necessitating the expansion of locations further away, making it impossible to develop townhouses at previous price levels. Developers may need to shift to condominium development instead.

The solution for developers is to develop long-term rental apartments for low-income individuals, which meets the needs of urban residents, allowing for product development at a price of 3,000 baht per month. This can be achieved by raising funds through selling to REITs to generate capital and create value for the project.