Impact of Covid-19 on Bangkok Real Estate Market 2020

Impacts on Bangkok Real Estate Market

Covid-19 has had significant impact to Bangkok real estate markets. However, it is expected that the situation would recover in 2021 except there is another wave of pandemic. By comparing housing sector to others; particularly commercial and leisure properties, housing sector is recovering better.

The average price was also decreased in every area. The price in the city fringe is 147,356 THB/sqm., 1.5% dropped from Q1 2020’s 149,600 THB/sqm. Depending on each project and promotions, the actual selling price might differ from the approximate price around 7 – 10%,.

As a result there are developers who choose to postpone the opening of new projects in the condominium market this year to next year, as they want to focus on the remaining stock in the market. Therefore, the number of new projects launches this year has decreased drastically.

This time is an opportunity for buyers who still have the purchasing power, as many developers give the big campaigns of discount. However, because the foreign customers can not come to Thailand, it is still not easy to recover until all situations to be resolved and back to normal.

Overall, if the country's overall economy improves, the real estate market in 2020 still has the potential to grow by up to 5-7%
 

1. Newly Launched Condominium Units in Bangkok : New launches decreased 78% Q-o-Q

•       Most new projects are on hold or the launch are postponed.
•       Due to the aggressive discount in completed projects, 25% - 50%, and the competitive market, it is the best time for buyers (both investors and end-users) to purchase condominium units at the moment.

2. Covid-19 impact on condominiums (Sales and foreign buyers)

•       Many sales galleries are closed and moved to online sales. Physical contact is not preferred because of social distancing.
•       The significant fall of demand from Chinese buyers has been caused by the travel restrictions since the outbreak began, as well as a slowdown in economic activity following the lockdown of several Chinese cities.
•       While the outbreak has also been a challenge for the Thai condominium market, property portal Juwai IQI, said Chinese buyers ”are still very active online and still have great demand for Thai property”.
•       Chinese buyers could return by the year’s third quarter at the earliest by the travel restrictions being lifted. However, the ratio of other foreign buyers will get lower.

Covid-19 impact on condominiums (New normal after Covid-19)

•       In April, visitors at sales galleries for housing are back to normal, and for condo are about 30%-50% back.
•       The demand for the single-detached house still remains amid the covid-19 spreading since most of the of house buyer are Thais or first-time buyers (actual demand).
•       Buyers will become more adapted to digital economy. Remote working and satellite office could become the new normal.
•       High price sensitivity to Local Thai buyers : condo at steep discount has resulted in sales increase from Thai buyers, illustrating appropriate price range for real demand, around 3-4 million Baht per unit.
•       People seek spacious space for kitchen or working space. Housing in suburban areas can offer bigger space, comparing to condos, which is more efficient for those who work from home.

Source: CBRE, Colliers, AREA, CNN