“Lumpini Wisdom” reports that real estate developers are accelerating the launch of new projects in the final quarter to boost sales in Q4 of 2022, resulting in a more than doubling of both the number and value of new project launches in 2022. This comes despite facing economic volatility due to inflation, household debt burdens, and rising interest rates.

Mr. Prabhan Sak Raksaiwan, Managing Director of Lumpini Wisdom and Solutions Co., Ltd., a real estate research and development company under L.P.N. Development Public Company Limited, discussed the real estate market trends for the final quarter of 2022. He stated that real estate developers continue to plan new project launches in the final quarter of 2022, despite facing economic fluctuations caused by inflation exceeding 5%, which has led to rising construction material prices. Additionally, the Monetary Policy Committee (MPC) is likely to continue raising policy interest rates, resulting in higher interest rates in the final quarter of 2022 compared to the first nine months of the year. Meanwhile, household debt remains high at around 90% of Gross Domestic Product (GDP). This is due to developers having delayed project launches since 2020-2021 as a result of the COVID-19 pandemic, leading to reduced inventory. Consequently, real estate developers need to move forward with new project launches to increase supply and stimulate market demand.

In the first nine months of 2022 (January-September 2022), real estate developers launched a total of 286 new projects in the Bangkok and surrounding areas, amounting to 76,220 units with a total value of 324.801 billion baht, representing growth of 124% and 87% respectively compared to the same period in 2021. This included the launch of 72 condominium projects with 39,431 units, an increase of 235% (YoY) valued at 96.836 billion baht, up 58% (YoY), with an average sales rate at the time of project launch of 31%. Additionally, 214 residential projects were launched with 36,789 units, an increase of 65% (YoY) valued at 227.965 billion baht, up 103% (YoY), with an average sales rate at the time of project launch of 14%. The highest launched residential projects were townhouses priced between 2-3 million baht, with an average sales rate of 10% at launch across various locations around Bangkok, such as Rangsit, Bang Bua Thong, and Bang Na. Following that were twin houses launched at prices between 3-6 million baht, with an average sales rate of 11% in areas like Bang Na, Bang Phli, Samut Prakan, and Bang Bua Thong, Nonthaburi, while single houses were launched at prices between 6-10 million baht, with an average sales rate of 12% in locations like Lam Luk Ka, Bang Phli, and Bang Bua Thong, Nonthaburi.

In the first six months of 2022 (January-June 2022), the transfer of residential ownership in Bangkok and surrounding areas totaled 87,316 units, an increase of 7% compared to the 81,553 units transferred in the first six months of 2021. The value of ownership transfers in the first half of 2022 was 297.159 billion baht, an increase of 1.12% compared to 293.845 billion baht in the first half of 2021.

“From the data on new project launches in the first nine months of 2022, which reflects supply, and the ownership transfer figures in the first half of 2022, which reflect demand, it is evident that there is continuous growth. Despite negative factors impacting economic growth, including the Russia-Ukraine war and rising inflation, this reflects the real demand in the market, especially in the residential sector priced between 3-5 million baht, which has strong purchasing power for both condominiums and residential houses,” Mr. Prabhan stated.

Given this trend, “Lumpini Wisdom” believes that real estate developers will continue to launch residential projects in the final quarter of the year to stimulate and stockpile sales, which will generate continuous revenue in 2023-2024. It is expected that the number of new project launches and their value in 2022 will more than double compared to 2021 to accumulate sales and replace the reduced inventory resulting from the delayed project launches in 2020-2021.

“At the same time, housing prices are expected to rise by 5-8% in 2023 due to increased costs from rising land prices based on the new land appraisal announced by the Treasury Department effective January 1, 2023, which is approximately 5-8% higher than in 2018, along with the minimum wage rate increasing by 5-8% (depending on the area) effective from October 1. Additionally, construction material prices are rising due to increased production costs from higher energy prices. Therefore, buyers looking to purchase housing for living (Real Demand) are deciding to buy at current prices, making this an opportunity for real estate developers to launch projects and marketing campaigns to stimulate and stockpile sales in the final quarter of the year, which is a golden opportunity for buyers to acquire properties at existing prices,” Mr. Prabhan concluded.