“LWS” anticipates that the launch of new residential projects in the Bangkok and surrounding areas in 2025 will likely slow down compared to 2024 due to a decline in purchasing power. The “Housing for Thai People” project absorbs the purchasing power of the mid to lower market segment, and the high volume of unsold inventory in the system will take at least 2-3 years to clear, depending on the location.

Mr. Prabhanasak Raksaiwan, Managing Director of LWS Wisdom and Solutions Co., Ltd., a real estate research and development company under the LP.N. Development Public Company Limited, stated that the trend for new residential launches in the Bangkok and surrounding areas in 2025 is expected to slow down compared to 2024. LWS has forecasted the possibility of new project launches in three scenarios, considering economic growth rates and purchasing power:

Best Case Scenario: This forecast is based on the Thai economy growing by 2.8-3% and 3% as predicted by the Bank of Thailand and the National Economic and Social Development Council. The tourism sector is expected to recover to pre-COVID-19 levels, public investment follows the planned schedule, exports continue to grow despite facing trade barriers from the United States, private sector investment increases, and domestic consumption recovers due to government debt restructuring measures. Energy prices remain stable at no more than $100 per barrel, keeping inflation below 1.5%. This scenario would lead to approximately 62,000-65,000 new residential units launched in the Bangkok and surrounding areas in 2025, valued at around 403-422 billion baht, representing growth of about 3-7% compared to 2024, which saw 349 new project launches totaling 60,386 units valued at 407.204 billion baht, a decrease of 20.13%, 39.01%, and 25.18% respectively compared to the total of 437 new projects launched in 2023, which amounted to 99,012 units and a total value of 544.265 billion baht. It is also expected that the transfer of new residential ownership nationwide in 2025 will be around 360,000-370,000 units, valued at approximately 1.02-1.03 trillion baht, representing growth of 1-2% from 2024, where the Housing Finance Corporation expects 350,545 units to be transferred, valued at 1,012.76 billion baht by the end of 2024.

Base Case Scenario: This forecast is based on the Thai economy growing by about 2-2.5% due to a slowdown in exports caused by trade barriers from the United States, delays in public investment, while tourism, domestic consumption, and private sector investment continue to expand. Energy prices remain stable at no more than $100 per barrel, keeping inflation below 1.5%. LWS expects around 56,000-61,000 new residential units to be launched in the Bangkok and surrounding areas in 2025, valued at approximately 364-403 billion baht, similar to 2024, with growth not exceeding 2%. The transfer of ownership is expected to be similar to 2024, around 1.012 trillion baht.

Worst Case Scenario: This forecast is based on the Thai economy growing by less than 2%, with a slowdown in exports, public investment failing to meet planned targets, and domestic consumption continuing to decline due to unresolved high household debt issues. Financial institutions remain strict in approving mortgage loans, while tourism and private sector investment continue to expand. Energy prices rise above $100 per barrel due to prolonged conflicts in Gaza and Ukraine, leading to inflation exceeding 2%. This scenario would result in new residential project launches in the Bangkok and surrounding areas in 2025 declining to levels similar to 2024, or decreasing by no less than 5%, while ownership transfer rates are expected to be negative compared to 2024, with a value of less than 1.012 trillion baht.

“The major issue in the real estate sector is that financial institutions are strict in approving mortgage loans, resulting in a rejection rate as high as 70%, especially for properties priced below 3 million baht. Additionally, financial institutions are stringent in considering project financing, requiring sales of 30-50% before approving project loans. This has led many real estate developers to delay plans for new project launches, with some projects already launched being postponed or canceled. The existing inventory is sufficient to sell for 2-3 years without launching new projects, causing many developers to delay their plans for new launches in 2025,” Mr. Prabhanasak stated.

At the same time, the government’s Housing for Thai People project is another factor that will absorb purchasing power in the mid to lower market segment, which accounts for no less than 40% of total purchasing power. With support from the government, some locations of the Housing for Thai People project are conveniently located, such as Km. 11 near the BTS line, making them attractive to middle-class buyers and new working professionals. This has led real estate developers to reassess and adjust their business plans to align with current market purchasing power, combined with government measures such as the reduction of transfer and mortgage fees that expired on December 31. This has increased the cost of purchasing residential properties, even though real estate companies may still reduce transfer and mortgage fees for customers to encourage purchases and transfers. However, this has increased the operational costs for developers, necessitating a review and the implementation of appropriate marketing measures to align with current purchasing power. Delaying new project launches and focusing on selling existing inventory at original costs is thus a viable option for real estate developers in 2025,” Mr. Prabhanasak concluded.

In 2024, the value of new project launches in Bangkok and surrounding areas decreased by nearly 40%

In 2024, there were 349 new project launches in the Bangkok and surrounding areas, totaling 60,386 units, with a total value of 407.204 billion baht, representing decreases of 20.13%, 39.01%, and 25.18% respectively compared to the total of 437 new projects launched in 2023, which amounted to 99,012 units and a total value of 544.265 billion baht. Among these, there were 69 residential condominium projects launched, totaling 26,750 units, valued at 120.574 billion baht, representing decreases of 28.12%, 42.42%, and 22.69% respectively compared to the 96 condominium projects launched in 2023, which totaled 46,464 units and a value of 155.968 billion baht. Additionally, there were 165 residential projects priced below 10 million baht, totaling 26,760 units, valued at 125.234 billion baht, representing decreases of 29.48%, 38.35%, and 34.86% respectively compared to the 234 projects launched in 2023, which totaled 43,410 units and a value of 192.264 billion baht.

Meanwhile, there were 120 residential projects priced at 10 million baht and above, totaling 6,876 units, valued at 161.397 billion baht. The number of new projects launched increased by 3.44%, while the number of units and the value of project launches decreased by 24.75% and 17.66% respectively compared to the 116 projects launched in 2023, which totaled 9,138 units and a value of 196.033 billion baht.

“In addition to the decrease in new project launches in 2024, it is expected that the value of residential ownership transfers in 2024 will also decrease by about 3-5% compared to 2023 due to financial institutions being strict in approving loans and the absence of measures to stimulate the real estate sector in the last quarter of the year. After the ownership transfer value in the first nine months of 2024 was 705.389 billion baht, down 8% from the ownership transfer value of 766.971 billion baht in the same period of 2023,” Mr. Prabhanasak concluded.