The outbreak of <\/span><\/span><\/span>COVID<\/span><\/span> in many countries, including Thailand, remains severe. As of March 12, 2022, there have been approximately 452 million cumulative infections worldwide, with about 6 million deaths, and approximately 10.704 billion vaccine doses administered. In Thailand, there have been about 3.1 million cumulative infections, approximately 23,500 deaths, and around 123.7 million vaccine doses administered.<\/span><\/span><\/span><\/p>\r\n\r\n

However, due to the Omicron variant posing a lower risk of death compared to previous strains, combined with the necessity for economic recovery, the Thai government has relaxed restrictions, allowing more businesses to operate. This has led to an increase in employment after a previous halt, and the country has started to open up for more travel, resulting in heightened expectations for the real estate market towards the end of 2021.<\/span> 2021 <\/span><\/span><\/span><\/p>\r\n\r\n

Thailand's Gross Domestic Product (GDP)<\/span> grew by 1.6% throughout 2021 compared to 2020, with a growth of 1.9% in the last quarter of 2021 compared to the last quarter of 2020. This growth was driven by improvements in transportation, agriculture, and exports, indicating a slight economic recovery after a contraction of 6.1% the previous year.<\/span><\/p>\r\n\r\n

The construction of key mass transit rail projects, which were delayed due to the pandemic, has hindered the revival of the real estate market along those routes. In 2021, only the red line suburban train from Taling Chan through Bang Sue to Rangsit station was operational, but passenger numbers remained low.<\/span><\/p>\r\n\r\n

The number of new residential units launched in Bangkok and its vicinity, which was already low in 2020, continued to decline in 2021, particularly with only about 21,500 new condominium units available for sale. In previous years before the COVID outbreak, an average of about 60,000 new condominium units were launched annually.<\/span><\/p>\r\n\r\n

Although new residential loans<\/span> issued nationwide in 2021 amounted to approximately 612 billion baht, close to the 2020 figure, compared to 640 billion baht in 2019 and a record high of about 702 billion baht in 2018, a deeper analysis reveals that the reason for the stable new residential loan figures is due to an increase in second-hand housing loans and refinancing from one financial institution to another, thus counting as new loans. Loans from state banks remain a key driver in supporting government policies.<\/span><\/p>\r\n\r\n

Outstanding residential loans in 2021<\/span> were valued at approximately 4.5015 trillion baht, an increase of 5.8% from 2020, which had an outstanding amount of about 4.255 trillion baht. This increase is likely due to debt moratoriums or restructuring, with repayments decreasing, resulting in unchanged old debts and new debts from some new residential loans.<\/span><\/p>\r\n\r\n

In addition to the housing market, commercial real estate has also been affected, including retail properties (due to social distancing measures, time and service limitations), hotels (due to the outbreak and travel difficulties), and office rental spaces (due to business closures or downsizing).<\/span><\/span><\/span><\/p>\r\n\r\n

The Bank of Thailand projected in December 2021 that the Thai economy would grow by about 3.4% in 2022<\/span>, while the National Economic and Social Development Council forecasted a growth of about 3.5-4.5% at the beginning of 2022, and the Fiscal Policy Office estimated a growth of 4.0%.<\/span><\/p>\r\n\r\n

If the environmental factors remain as they are now, the real estate market is likely to recover more in 2022. However, <\/span><\/span>operators in the housing market will continue to face a slow growth environment similar to last year, with both existing and new risk factors that may impact housing purchasing power.<\/span><\/span><\/span><\/p>\r\n\r\n

A new risk factor is the war situation in Ukraine, which, if prolonged, could lead to increased tensions between Western countries and those behind the Iron Curtain, resulting in rapidly rising oil prices. Since oil prices are a significant cost in transportation and production, combined with supply chain disruptions due to the war, consumer goods prices are likely to rise both domestically and internationally, leading to inflation. This could cause global and Thai economic growth rates to fall short of expectations and impact consumer purchasing power.<\/span><\/span><\/span><\/p>\r\n\r\n

Household debt remains high, with household debt at 89.3% of GDP in Q3 2021, and households have seen a decrease in savings. The average Debt Service Ratio (DSR) for Thai households has been around 30% since 2019 and has increased above 30% after the COVID outbreak, as households have borrowed to compensate for lost income.<\/span><\/p>\r\n\r\n

The household debt situation has reduced the potential for purchasing housing. Notably, household debt related to housing loans accounts for only about one-third of total household debt, compared to many countries where housing loans represent about 40% of total household debt. This indicates that household borrowing in Thailand is primarily for other consumption purposes, such as credit card loans, car loans, and various personal loans, at a high proportion that prevents them from obtaining loans for housing purchases due to a high Debt Service Ratio.<\/span><\/p>\r\n\r\n

Real estate operators must navigate through 2022, with the real estate market expected to show clearer recovery in 2023. However, due to operators generally delaying new project launches, particularly condominiums, which saw only about 51,000 units launched in the past two years combined, the remaining new housing supply is beginning to decrease. This may present an opportunity for new housing units to be launched in 2022, with an expected 30,000-35,000 new condominium units and about 40,000 new housing projects available for sale this year.<\/span><\/p>