Thai condo market hit by economic woes and Myanmar restrictions

The Thai condo market is experiencing a downturn due to the current economic situation, with banks tightening lending and household debt remaining high. The recent stringent regulations by the Myanmar government have further impacted sales, as Myanmar buyers are significant customers second only to Chinese buyers.

Thailand’s real estate market has been negatively affected by the Myanmar government’s restrictions on their citizens purchasing condominiums in Thailand. This move has resulted in a drop in sales, as Myanmar nationals represent a key segment of the foreign buyer market.

According to the President of the Thai Condominium Association, Prasert Taedullayasatit, this downturn in demand from Myanmar buyers will likely affect the real estate market’s performance in the second quarter, continuing the negative trend from the first quarter.

The current weak domestic purchasing power, exacerbated by high household debt and a high rate of loan rejections, compounds the issue.

Prasert explained that although Myanmar buyers represent a smaller portion compared to Chinese buyers, who are still the largest group of foreign condominium purchasers, the overall impact on the market cannot be overlooked.

Chairman of the Board of Directors at Siamese Asset Public Company Limited, Kajonsit Singhsansenee, mentioned that their company had recently expanded into the Myanmar market, achieving sales of approximately ten units priced between 5 to 10 million baht in their Rama 9 project.

Impacts pending

Despite the new restrictions, the company has not yet felt any significant impact on the condo market, as its main customers remain from China and Taiwan.

Kajonsit highlighted that due to the poor domestic market conditions, with loan rejections as high as 50% for properties under 3 million baht, the company relies heavily on foreign buyers. Kajonsit commented on the state of Thailand’s economy and its effects on the real estate market.

“We have to admit that the Thai economy is not doing well at all, due to multiple factors. The major issue is the persistently high household debt, which affects purchasing power across all sectors, including real estate.

If the government aims to achieve a 3% GDP growth this year, they’ll have to put in a lot of effort, as only the tourism sector seems to be a supporting factor. However, if the digital money project rolls out by the end of this year, it might help, but it remains uncertain.”

CEO of Pruksa Real Estate Public Company Limited, Piya Prayong noted that their company has a relatively small number of Myanmar customers, as they have only recently entered that market.

Consequently, they have not been significantly affected by the new regulations and are exploring other markets, such as Taiwan and China. Piya commented on the overall difficulties of the real estate market.

Sluggish market

“The real estate market over the past five months has been sluggish, in line with the stagnant economy and recurring issues like the high loan rejection rate of 40%. Government measures haven’t been very effective, resulting in sales falling slightly short of targets.”

Co-CEO of Origin Vertical Corporation under Origin Property Public Company Limited, Apisith Sunthornchukeat mentioned that the overall foreign customer market remains robust, particularly with Chinese buyers continuing to show interest.

However, the Myanmar market has started to slow down due to the new restrictions, prompting the company to halt its marketing efforts in Myanmar and focus on new markets such as Taiwan, India, Europe, and the United States.

The Thai condo market is facing significant challenges from both domestic economic conditions and international regulatory changes, necessitating a strategic shift towards new markets and higher-end properties to sustain growth, reported KhaoSod.