Lumpini Wisdom forecasts that the launch of new real estate projects in 2023 is expected to grow by 5-15%, while housing prices are likely to increase by approximately 5-10% due to rising land prices, labor costs, construction material prices, and interest rates.

Meanwhile, property transfers are projected to grow by 0-10%, depending on the growth rate of the Thai economy and the impact of the cancellation of the relaxed loan-to-value (LTV) measures and stricter mortgage loan approvals by financial institutions.

Mr. Prabhan Sak Raksaiwan, Managing Director of Lumpini Wisdom and Solutions Co., Ltd. (LWS), a real estate research and development company under L.P.N. Development Public Company Limited, predicts that the launch of new real estate projects in Bangkok and its vicinity in 2023 will likely grow by 5-15%, while property transfers are expected to grow by 0-10%, depending on the Thai economy's growth rate in 2023.

In making these predictions, LWS analyzed the potential for economic and real estate growth under three scenarios:

  • Best Case: This scenario assumes global economic growth of at least 2.9% and a resolution to the Russia-Ukraine conflict, which would stimulate Thailand's economy to grow by at least 4.2% with inflation not exceeding 3%. This would lead to approximately 118,000 new real estate units launched in Bangkok and its vicinity in 2023, valued at around 543 billion baht, representing a 15% growth, with property transfers expected to grow by at least 10% compared to 2022.
  • Base Case: This scenario assumes global economic growth of about 2% and a prolonged but not severe Russia-Ukraine conflict, stimulating Thailand's economy to grow by at least 3.5% with inflation not exceeding 3%. This would result in approximately 108,000 new real estate units launched in Bangkok and its vicinity in 2023, valued at around 488 billion baht, representing a 10% growth, with property transfers expected to grow by at least 5% compared to 2022.
  • Worst Case: This scenario assumes global economic growth of less than 2% and a prolonged and severe Russia-Ukraine conflict, leading to Thailand's economy growing by less than 3% and inflation exceeding 5%. This would result in approximately 105,000 new real estate units launched in Bangkok and its vicinity in 2023, valued at around 474 billion baht, representing less than 5% growth, with property transfers expected to remain stable compared to 2022.

New Project Launches in 2022 Grew by 85%

According to LWS's survey, the launch of new residential projects in Bangkok and its vicinity (Supply) in 2022 saw 394 new projects, totaling 103,340 units with a value of 457.605 billion baht, marking an 85% and 71% increase respectively compared to the number and value of new project launches in 2021. The average sales rate at the time of launch was 20%, with 92 condominium projects totaling 51,680 units valued at 135.297 billion baht, representing a 147% and 45% increase compared to 2021, with an average sales rate of 29% at the time of launch. Additionally, 302 residential projects totaling 51,660 units valued at 322.308 billion baht were launched, reflecting a 48% and 84% increase respectively compared to 2021, with an average sales rate of 12% at the time of launch.

The large number of project launches in 2022 resulted in a 1% increase in the number of unsold residential units in Bangkok and its vicinity (Inventory) compared to 2021, with a total of 209,326 unsold units at the end of 2022. The unsold units of residential houses increased by 2.9%, while unsold condominium units decreased by 1.8%, requiring approximately 18 months to sell.

Meanwhile, the number and value of property transfers (Demand) accumulated in the first nine months of 2022 increased by 15% and 10% respectively compared to the same period in 2021, with 139,213 units transferred, valued at 468.646 billion baht. LWS anticipates that by the end of 2022, a total of 171,000 units will be transferred, valued at approximately 594 billion baht, representing a 2% growth in both the number of units and the value of property transfers compared to 2021, marking the first growth in property transfers in two years since the onset of the COVID-19 pandemic in 2020.

6 Risk Factors Affecting Real Estate in 2023

Regarding the risk factors that may impact the real estate sector in 2023, Mr. Prabhan stated that in addition to the volatility of the global and Thai economies directly affecting the growth of the real estate sector, the Bank of Thailand's cancellation of relaxed loan-to-value (LTV) measures will impact the purchase of second and subsequent homes. Additionally, the adjustment of the transfer fee from 0.01% to 1% (from the normal rate of 2%), the trend of rising interest rates, the new land appraisal prices increasing by 8-10% effective January 1, 2023, the minimum wage increase of 5-8%, and the potential political uncertainties following the general election expected around the second quarter of 2023 are all risk factors that could affect purchasing power in 2023 and lead to an expected increase in housing prices of approximately 5-10% compared to 2022, depending on location and type of housing.

“Despite several risk factors impacting the real estate sector in 2023, China's reopening on January 8, 2023, is likely to be a positive factor stimulating the purchasing power of Chinese investors in real estate, who have been continuously investing in Thai real estate since 2018,” Mr. Prabhan stated.

According to data collected by LWS from the Land Department regarding property transfers to foreigners, it was found that from 2018 to the present, property transfers to Chinese nationals accounted for approximately 48-55% of the total value of property transfers to foreigners, ranking first compared to other nationalities investing in Thai real estate.

Residential properties that continue to have strong purchasing power from both Thai and foreign buyers include condominiums near BTS lines and community areas priced at no more than 3 million baht per unit, and residential houses priced at no more than 5 million baht located in convenient areas, as well as residential properties priced over 10 million baht per unit located near the Central Business District (CBD).

“After facing the COVID-19 pandemic from 2020 to 2022 and the economic recession in 2022, which was a crisis on top of a crisis, 2023 will be another challenging year for real estate operators to drive their businesses amid the emerging risks and opportunities,” Mr. Prabhan concluded.