"LWS" has revised its forecast for the real estate market in Bangkok and its vicinity for 2023 down to 0-5% from the previous estimate of 10-15% due to the Thai economy recovering at a lower-than-expected rate, household debt burdens, and high interest rates, along with the cancellation of measures relaxing the Loan-to-Value (LTV) ratio, which directly impacts purchasing power for housing in 2023.

Mr. Prabhan Sak Raksaiwan, Managing Director of LWS Wisdom and Solutions Co., Ltd., a real estate research and development company under LP-N Development Public Company Limited, stated that the trend for the real estate market in Bangkok and its vicinity in the second half of 2023 is expected to show continued growth from 2022, but at a slower rate than anticipated, as growth is concentrated in the service and tourism sectors while the export sector has been continuously negative in the first half of 2023. Coupled with rising household debt reaching 90.6% and interest rates expected to continue rising, with the policy rate projected to be no less than 2.25-2.5% by the end of 2023, and the Bank of Thailand having canceled the LTV relaxation measures effective January 1, 2023, along with political uncertainties following the elections, this will likely slow down purchasing power for housing in the latter half of 2023.

According to "LWS," the real estate market in Bangkok and its vicinity in 2023 is expected to be similar to 2022 or grow no more than 5%, with an anticipated new launch of 105,000-108,000 units, valued at approximately 474,000-488,000 million baht, compared to 2022, which had 103,000 units launched valued at 457,000 million baht.

In a survey of new residential project launches in Bangkok and its vicinity during the first half of 2023, "LWS" found that real estate developers launched a total of 179 projects, an increase of 9.81% from the same period in 2022, resulting in a total of 45,162 units launched in the first half of 2023, a decrease of 13% from the 51,946 units launched in the first half of 2022. The total value of project launches in the first half of 2023 was 203,016 million baht, an increase of 8% from the 188,373 million baht in the first half of 2022, with an average sales rate at the time of project launch at 18% in the first half of 2023, down from 25% in the same period of 2022.

While the number of projects launched increased, the number of units launched decreased, but the value increased, reflecting that real estate developers are launching more projects with fewer units per project and higher selling prices, particularly in the high-end housing market to meet buyer demand. In contrast, the launch of residential condominiums saw a decrease in the number of projects, units launched, and prices.

According to a survey by "LWS," in the first half of 2023, out of the total 179 project launches, there were 45 residential condominium projects launched, totaling 24,167 units valued at 68,561 million baht, representing a decrease of 6.2% (YoY), 21% (YoY), and 12% (YoY) respectively, compared to 48 projects with 30,579 units valued at 78,078 million baht in the first half of 2022. June 2023 saw the highest number and value of project launches compared to the first five months of 2023, with a total of 6,372 units launched, valued at 18,504 million baht, an increase of 58.9% and 12.77% respectively compared to May 2023.

The average sales rate at the time of launch was 28% in the first half of 2023, down from 33% in the same period of 2022, with the top three locations for project launches being Bang Khen near Bangkok University, Ratchada-Huai Khwang, and Pattanakarn, where the most sought-after selling prices were for condominiums priced under 5 million baht, appealing to both buyers for residence and investment.

In the first half of 2023, the launch of residential housing projects in Bangkok and its vicinity totaled 134 projects, with 92 projects priced below 10 million baht, an increase of 2.22% compared to 90 projects launched in the same period of 2022. However, the total number of units launched was 18,467, a decrease of 4.52% compared to 19,343 units in the first half of 2022. The value of residential projects priced below 10 million baht in the first half of 2023 was 75,203 million baht, an increase of 2.18% compared to 73,597 million baht in the same period of 2022, with an average selling price of 4.07 million baht per unit, representing a 7.1% increase from the average price of 3.8 million baht per unit in the first half of 2022. The top three locations for residential projects priced below 10 million baht were Rangsit-Nakhon Nayok, Pracha Uthit-Phutthabucha, and Navanakorn, with average selling prices not exceeding 5 million baht.

For residential projects priced over 10 million baht, there were 42 projects launched in the first half of 2023, totaling 2,528 units with a total value of 59,252 million baht, representing increases of 68%, 24.9%, and 61.45% respectively compared to the same period in 2022, which had 25 projects, 2,024 units, and a total value of 36,698 million baht. The average sales rate at the time of launch was 12% in the first half of 2023, down from 15% in the same period of 2022. The increase in the number and value of projects has resulted in an average selling price of residential properties priced over 10 million baht at 23.43 million baht per unit in the first half of 2023, a 29.23% increase from the average price of 18.13 million baht per unit in the first half of 2022, with the top three locations for projects priced over 10 million baht being Songprapa-Don Mueang, Phahonyothin-Rangsit, and Watcharapol, with Watcharapol having the highest average sales rate at 19%.

From the data on residential project launches in the first half of 2023, it is evident that real estate developers have adjusted their strategies to launch higher-priced residential projects to meet the demand of existing purchasing power in the market. At the same time, the market for properties priced over 10 million baht has the lowest rejection rate compared to the market for properties priced below 10 million baht.

"Given the situation in the first half of the year, where real estate developers have slowed down their plans to launch new projects, especially in the condominium segment, "LWS" predicts that new project launches in the second half of 2023 will continue to slow down from the first half, particularly in the third quarter, where political uncertainties remain high. This is likely to lead developers to delay new project launches in the third quarter, especially for condominium projects, but they may accelerate launches in the final quarter of the year if political conditions become more certain. Based on this situation, we anticipate that the real estate market in 2023 will grow close to or no more than 5% compared to 2022, which is a reduction from our previous forecast of 10-15% growth," Mr. Prabhan Sak stated.

Additionally, real estate developers listed on the Stock Exchange of Thailand are likely to expand their project launches into provincial areas to broaden their customer base and increase sales after facing a slowdown in purchasing power in the Bangkok and vicinity areas.

"We will see major developers in the market launching projects in provinces further away from the outskirts (Nonthaburi, Pathum Thani, Samut Prakan) more frequently, including in special economic zones in the Eastern Economic Corridor (EEC) and tourist areas like Phuket, to generate sales and create new revenue streams," Mr. Prabhan Sak concluded.