The real estate market in 2020 has been particularly challenging due to the unexpected impact of the COVID-19 pandemic. One of the industry experts, "Atip Pichanont," stated that "this year is a challenging year" in terms of sales and profits.

The real estate development business in 2020 has faced significant hardships due to the COVID-19 outbreak, which has affected the market unexpectedly. Atip Pichanont, currently serving as the chairman of the Real Estate and Construction Trade Association of the Thai Chamber of Commerce, remarked that "this year is a challenging year..!!" for both sales and profits.

Real estate developers must adapt by reviewing their business and financial plans to align with the changing consumer behaviors and the current situation to overcome this crisis.

Atip noted that over the past seven months (January to July), the real estate market has faced uncertainty, fluctuating with the declining purchasing power. As economic confidence remains low and the future is uncertain, real estate developers find it difficult to predict the market situation.

“We do not know how long COVID will last, whether there will be a solution for the international economy, and how the domestic economic fluctuations in the second half of the year will unfold, along with the stability of the political situation in the country,” he stated.

Currently, there is a lot of uncertainty, making it too early to say that the real estate market is on the verge of recovery.

However, he acknowledged that there are signs of recovery in the landed property market compared to the condominium market, which is tied to future confidence. Buyers of condominiums today are not moving in immediately; they must wait another 2-3 years until the condos are completed. Some are still unsure about their future income, making them hesitant to make a purchase.

Atip also observed that part of the demand in the condominium market is 'not' real demand (the need for actual residence), as it consists of demand from investors buying for speculation and rental purposes. Additionally, foreign buyers have not returned fully, resulting in the condominium market being more severely impacted than the landed property market.

 

“Currently, what is frustrating for business operators is that we still cannot open the country. It feels like we are only trading within our own backyard, but we cannot allow foreigners to come in to buy, invest, or travel. Although there may be some signs of relief as COVID in Thailand has eased, we have passed through one turbulence but do not know how many more there are to come. From what I see, I believe there will be more turbulence because COVID abroad is still ongoing,” he added.

Atip also mentioned that the National Economic and Social Development Council has projected that Thailand's GDP growth rate for the entire year will be negative 7.5-7.8%. Assuming an 8% GDP decline, the overall real estate market is expected to decline by no less than 15%, with the condominium market likely experiencing an even greater decline!

“Currently, the sales of landed properties are helping to reduce the overall decline in the real estate market, with landed properties likely to decline by no more than 5%. This is because the growth base was not as high compared to condominiums, so when fluctuations occur, they will be less severe. Landed properties represent real demand, while condominiums have a mix, with 60% being real demand and the remaining 40% coming from other buyers who are speculating, investing, and foreign buyers,” he explained.

Atip estimates that this year, the condominium market will see a significant drop in speculative buyers, while actual residents are still present but may face challenges in securing loans. Consequently, the condominium market is expected to decline by no less than 50%. When combining the two figures (landed properties and condominiums), the overall market is projected to decline by 55%. With the landed properties making up 60% and condominiums 40%, the average decline for the overall real estate market is estimated to be between 15-20%.

“We must accept and understand the situation that we cannot control; it’s like rain falling or a storm coming. We cannot shout for it to stop, just as we cannot command an orange to halt. Even if we scream, we cannot change it. We must understand the situation and know how to preserve ourselves to survive the storm before starting anew,” he stated.

Atip emphasized that if real estate developers do not understand the situation and act at the wrong moment, they will face difficulties and suffer losses. In such a crisis, it is essential to maintain liquidity, avoid over-investing, and refrain from accumulating debt, as income or returns are not coming in as expected. Selling properties is not as easy as before, and the transfer of ownership is decreasing. Therefore, controlling expenses is crucial to survive by streamlining their organizations as much as possible.

“If you are going to launch a project, it should only be for those you are confident will be safe. Simply put, if your incoming cash flow is less than your outgoing cash flow, you will face trouble. You must think logically; if you cannot think logically, you won’t know how to help. Right now, everyone is struggling. As a member of the association and the Chamber of Commerce, we will warn and act like a village headman informing the villagers, keeping them updated on the situation. However, each household must manage their own affairs,” he concluded.

SOURCE: www.bangkokbiznews.com/news/detail/894558?utm_source=slide_topnews&utm_medium=internal_referral