Real estate industry in Thailand have been rapidly expanding in recent years. Since the property market boom during the year 2008 till 2018. Thailand real estate industry have grown expotionaly bringing it lots of foreign direct investments. But with more supply than demand in 2019, the real estate industry have seen some downward trend. But year-on-year growth in the industry was always more than 10%. Although the pandemic causes lots of labor shortages, distribution and delayed launches there are still growth in the real estate sector.
According to recent estimates, real estate industry was valued at THB 4,780 billion in 2020 and it is expected to continue its upward trend with a projected growth rate of 8.8% by 2022. It is anticipated that the industry will be worth THB 5,967 billion in 2023 with growth year-on-year higher than expected. Thai real estate market consists of multiple sectors, including the condominium market, the single detached house market, and the landed house market. Each sector possesses unique features and adds to the industry's overall growth.
Are you a real estate investor or a retail stock market trader, or a homebuyer having interest in Thailand's real estate industry? Then look no further!
We'll provide an in-depth financial analysis of Thailand's real estate industry, covering market size, value and growth projections for each sector. We'll also examine the total number of housing units and average housing prices in Thailand. By the end of real estate sector industry study, you'll gain a better understanding of the financial landscape of Thailand's real estate market and have the necessary tools to make informed investment decisions. Get ready to explore the world of Thai real estate finance and uncover valuable insights and take advantage of the opportunities in Southeast Asia paradise property market or the Land of Smiles!
Table of Contents
But first let's get a very simple question away and give you a proper answer on "what is real estate"?.
What is Real Estate?
Real estate is defined to as the land as well as any permanent, whether natural or man-made, structures or improvements related to the property, such as a house. One type of real property is real estate. It contrasts from personal property, such as cars, yachts, jewels, furniture, and farm equipment, which is not permanently affixed to the land. Real estate is something permanently affixed to or constructed on land, whether it be created naturally or artificially.
Real estate can be divided into five primary property types: residential, commercial, industrial, raw land, and special use citied by investopedia.
We got that out of the way let's now discuss the overview, market trends and financial earnings of property sector at the Land of Smiles.
Real Estate Sector Overview
Thailand's residential sector have seen remarkable growth in recent years. Valued at THB 4,780 billion in 2020, the sector is expected to grow at a rate of 8.8%, reaching THB 5,967 billion by 2022 4 quarter earnings coming out in 2023.
Residential sector in Thailand is made up of several sub-sectors, including the condo market, single detached house market and purchase of land. Each property sub-sectors have its unique features and contributes to the overall growth of the industry.
Condominium market was worth THB 1,157 billion in 2020, while the single detached house market was valued at THB 2,264 billion. The landed house market was worth THB 1,359 billion. These sub-sectors are projected to grow year-on-year at a rate of 5.5%, 7.1% and 8.8%, respectively, with low-rise presale condos expected to show highest growth rate of 127% from all major 12 property developers.
In terms of the total number of housing units, residential sector had a total of 15.6 million units in 2020. This number is expected to increase to 16.7 million units by end of 2022 earning reports showing a growth rate of 6.9%.
Record high of pre-sales year-on-year growth of 14% in 2022 earnings report coming to 2023 for 189,00,000. Condo sales have reach peak high of 239,000,000 almost reaching top peak for the year 2018.
Real Estate Sector Trends 2023
The real estate market in Thailand has experienced an increase in confidence, which has led to a surge in new launches by developers. In 2022, the value of new launches by 12 developers is expected to reach Bt319bn, reflecting a growth of 127% from the previous year. The value of new low-rise projects rose 118% YoY to Bt226bn, and new condos increased to Bt92bn, up by 152% YoY. However, it is still lower than the peak level of Bt183bn in 2018. The labor shortage is the main reason for this deviation and not a lack of demand.
For 2023, we expect the real estate sector to show strong earnings growth of 27%. Although the labor shortage and THB's appreciation against the USD in 4Q22 impacted some developers' earnings, we predict the sector's 4Q22 earnings to remain flat QoQ. Nevertheless, the earnings will still show growth YoY. The rights transfers of many developers will remain robust due to the heavy backlog transfer and decisions to move planned revenue from 1Q23E to 4Q22E. This action will reduce the impact of higher transfer fees, which will result in record high annual earnings for AP, BRI, ORI, SC, SIRI, and SPALI in 2022.
Factors On Real Estate Growth
Thai real estate market have seen impressive growth in recent years, and several factors have contributed to this trend. First main trend is on growing urbanization and population growth in Thailand results of increasing demand for residencial units, which drives the real estate sector forward.
Second trend factor is the higher pre-sales in low-rise condominiums, which have also plays a significant role in the sector's growth. Additionally, the low-interest rates in Thailand have attracted foreign investors, resulting in an increase in foreign direct investments. The government's decision to open up borders has also led to more foreign investors coming into the country especially homebuyers from mainland China.
To read a full guide on what we can learn from here Chinese property crisis explained.
Lastly, real estate trend to look out for are good supply of housing units within the expected time frame has resulted in higher pre-sales, which, in turn, has boosted the sector's growth. With these factors at play, it is no surprise that the real estate market in Thailand continues to expand at a steady pace.
Thailand Real Estate Sector Challenges
Investing in the Thai real estate market is not without its challenges and risks. One major challenge is political instability, which can create uncertainty and affect property values. With the new election soon coming up on May 7 2023.
Economic uncertainty is also a risk, as fluctuations in the global and regional economy can impact the demand for property. Regulatory issues can also pose a risk, as changes in laws and regulations can affect the market and investment opportunities
- Political instability leading to uncertainty and affecting property values. A poll by Bangkok Post show that in 2023 political instability to be chaotic but economics improving.
- Economic uncertainty from global and regional economic fluctuations affecting demand for property and the appreciation of currency market and even FED increase of interest rates.
- Regulatory issues potentially impacting the market and investment opportunities.
Real Estate Stocks in Thailand
Top property developers in Thailand with strong sales and condo launches reaching new heights include Origin (ORI), AP, SENA, Supalai (SPALI), and Sansiri (SIRI). These companies have reported strong earnings growth in recent quarters, as shown in the table below.
As seen in the table, all five companies have shown consistent growth in their earnings over the past few quarters. AP, ORI, and SIRI have been reporting strong earnings growth, while SENA and SPALI have had some fluctuations in earnings, but still show overall strong growth. These companies are worth keeping an eye on for investors interested in the Thai real estate market.
| Company | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22E |
|---|---|---|---|---|---|---|---|---|
| AP | 1,403 | 1,115 | 1,031 | 994 | 1,730 | 1,574 | 1,419 | 1,190 |
| ORI | 825 | 852 | 709 | 808 | 738 | 1,155 | 848 | 1,075 |
| SENA | 229 | 218 | 166 | 637 | 336 | 303 | 64 | 180 |
| SIRI | 384 | 662 | 628 | 343 | 303 | 918 | 1,268 | 1,650 |
| SPALI | 741 | 1,730 | 1,720 | 2,879 | 1,178 | 2,075 | 2,749 | 1,710 |
Conclusion
To make well-inform investment decisions in crazy and unexpected dynamic world of Thai real estate market. Investors must stay up-to-date on the latest property trends and news. The industry's continuous evolution presents both opportunities and challenges, and it's crucial for investors to understand and navigate these changes to achieve success. By closely monitoring the market and staying informed about developments and emerging opportunities, investors can position themselves for success in Thailand's real estate sector.
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