Thailand’s property market waits for an end to Covid-19

The Coronavirus outbreak poses challenges for Thailand’s property market as potential Chinese condominium buyers remain stranded in China. Meanwhile, some believe that the outbreak may bring opportunities for non-Chinese buyers and in the long-run, the Chinese may be looking for an overseas refuge in the event of these types of emergencies popping up again

Through all this, there will be a certain level of pent up demand for Thai real estate.

Of course, it’s not just the Chinese unable to come and inspect potential buys, the rest of the world is also mostly shut out of Thailand.

Market remains weak

The pandemic is hurting the condominium market as Chinese nationals were accounting for half of the international buyers in Thailand, or 57.6% of the total foreign condo owners in 2018.

Vichai Viratkapan, acting director-general of the Real Estate Information Centre says that 50% of Chinese condo transfers are expected to disappear in the first 2 quarters of this year and the total transfer value by the Chinese will miss the mark of the usual 29 billion baht by about 25% (around 7 billion).

However, since Chinese property buyers only make up 6% of the total international and domestic housing transfers in Thailand, the proportion of total housing transfers in the country is likely to be similar to last year.

Developers looking to sell current stock whilst shelving new projects

CBRE reports that most Thai developers are postponing the launch of new condo projects to focus on clearing existing stock.

“Discounting completed projects to generate quick revenue as a financial lifeboat is the best solution for many of the country’s larger developers whilst the market is in limbo.”

Rathawat Kuvijitrsuwan, head of CBRE Research and Consulting in Thailand believes that, now business is gradually recovering, a few developers have started to launch new condominium projects.

“In the first half of 2020, the Bangkok condominium landscape was gloomy with fewer than 10,000 condominium units launched, which was much lower than the total number of new launches in the past three years of more than 60,000 condominium units per year.”

The Chinese are reluctant to complete transfers

The virus has continued to affect hospitality operators, including hotels and condominiums that service tourists, nationwide. Since China has suspended tours, put restrictions on movement, and locked down cities, home to over millions of people, it also poses a threat to real estate developers as their clients are unable or unwilling to fly.

“Currently multiple off-plan condominium developments are approaching completion, and Chinese clients are unable or unwilling to transfer. Chinese clients who made a reservation in Q4 2019 are requesting a refund and withholding their investment,” said Marciano Bijmohun, Business Development Director at FazWaz Property Group.

He believes every condominium that is in transfer status will see the percentage of non-transfer units rise in the coming months.

“These non-transfer units will cause a big financial hit to developers.”

If a client refuses to transfer, does not comply with the terms and conditions stipulated in the sales and purchase agreement, and decides to release the property, their deposits will be forfeited.

“However, there is some good news, these non-transferred units can be offered with a discount to new clients.”

Also, as China has been susceptible to a few disease outbreaks – from bird flu to the current coronavirus – it may prompt Chinese buyers to look for second homes outside of China.