Nexus Co., Ltd. has released an analysis of the Thai real estate market, indicating it remains stable. The report highlights negative factors affecting the market due to global economic fluctuations, impacting investor confidence. The LTV measures are still in effect, prompting operators to adjust in the second half of the year. Meanwhile, both Thai and foreign investors are shifting towards businesses that generate long-term income. However, there are positive factors such as the reduction in interest rates and the continuity of policies from the previous government. It is recommended that the government reduce transfer fees and specific business taxes while opening opportunities for second-hand homes to stimulate the market for the remainder of the year.

Mrs. Nalinrat Chareonsuphong, Managing Director of Nexus Property Marketing Company Limited (NEXUS), stated that based on the analysis of real estate market data since the beginning of the year, it is expected that the market will continue to face uncertainty for the remainder of the year. Looking at the global economic landscape, the trade war between China and the United States has led China to devalue the yuan, affecting Chinese investors' investments in foreign markets, including Thailand. Additionally, political unrest in Hong Kong has caused stagnation in investments in Thailand as well. The continuously strengthening Thai baht has also increased property prices. However, since the main consumer group in the Thai real estate market consists of domestic buyers, it is estimated that the impact from the global economy may affect the Thai real estate market by no more than 10-15% of the overall housing market. While this may not significantly impact the overall market, it will certainly affect the Thai capital market.

In addition to external negative factors, domestic issues such as the LTV measures and rising household debt are also significant negatives that should not be overlooked. Since the government announced the implementation of LTV measures to curb speculation among investors (effective April 1), consumers have rushed to incur debt to qualify before the measures took effect, resulting in a decline in loan approvals since the second quarter of last year. If these measures are not relaxed, it is expected that the real estate market will not be able to grow as it has in previous years.

When considering the LTV measures, it is evident that since their implementation, the market has slowed down across all sectors, whether in homes or condominiums at all price levels, as buyers must consider their borrowing capacity more carefully. This has led major and medium-sized developers to announce the impact of these measures on their businesses and call for a relaxation of these policies. Many projects launched in the second quarter of 2019 have adjusted their marketing strategies to focus more on real buyers.

Nevertheless, the market still has positive factors supporting it, such as the Bank of Thailand's announcement to lower the policy interest rate by 0.25%, which directly benefits operators by allowing them to apply for loans at lower costs. Meanwhile, individual borrowers can also apply for loans at reduced interest rates. Additionally, the government formed from the elections is the same as the previous one, ensuring continuity in various policies, including investment, infrastructure, public transport systems, and special economic zone development projects.

“Although the market has positive factors, they still have a lesser impact on the real estate market compared to negative factors. Therefore, I would like to request the current government to establish measures to stimulate the market for the remainder of the year, such as considering reducing transfer fees and specific business taxes for properties ready for transfer this year. This would help stimulate buyers who meet the LTV criteria to have lower purchasing costs while also enabling developers to sell completed products. It would be beneficial to allow reductions in these fees for properties at all price levels and to provide special rights for second-hand properties, as the second-hand real estate market in Thailand has not grown significantly despite being an opportunity for buyers to purchase quality properties that are larger than new products at similar prices in potential locations. This could help the market expand better,” Mrs. Nalinrat stated.

Regarding the direction of the real estate market for the remainder of the year, it is expected that many companies will need to expedite the sale of existing products based on actual demand. Relying on foreign markets may not be as vibrant as it was 2-3 years ago, especially in the Chinese and Hong Kong markets. Companies may need to adjust their investment plans towards businesses that generate long-term income, such as investing in hotels, office buildings, or overseas investments. Selling off certain plots of land that do not generate income or even adjusting the development plans of already purchased land from residential sales to long-term investment markets may also be necessary.

Thank you for the information from nexus.co.th