Thailand’s real estate market is expected to experience a dramatic rebound in 2023, making it an excellent investment opportunity for both domestic and foreign buyers looking for outsized returns amid global turbulence. The optimism for this rebound is largely due to the successful reopening of the country’s borders and the resulting influx of foreign visitors. In fact, visitor numbers in some cases have already exceeded pre-pandemic records.
The Real Estate Information Center (REIC) of Thailand, a unit of the Government Housing Bank, predicts that the country’s housing market will return to pre-pandemic levels by the end of 2023, earlier than originally forecast. The REIC cites the easing of mortgage requirements and the reopening of borders as major factors in this optimistic outlook.
The Central Bank of Thailand recently relaxed mortgage rules in an effort to revive the real estate sector, which accounts for approximately 10% of the country’s GDP and employs 2.8 million people. The easing of these regulations is expected to increase mortgages by 50 billion baht (about $1.53 billion) per year. However, despite these efforts, some Thai banks remain cautious about lending to home buyers due to the still-weak economy and the challenges of higher costs and a shortage of migrant workers in the property sector due to the ongoing pandemic.
In addition to the easing of mortgage requirements, the reopening of Thailand’s borders has already had a positive impact on the real estate market. As the country’s tourism industry begins to recover, the demand for both residential and commercial properties is expected to increase. This is particularly true for the hotel and hospitality sectors, which are poised to benefit from the gradual recovery of international tourism driven by pent-up demand.
For foreign investors, the relaxation of mortgage requirements and the availability of attractive real estate opportunities make Thailand an appealing destination. The REIC encourages the Thai authorities to make housing more affordable for foreign nationals, recognizing that this could potentially increase the volume of loans by $1.53 billion per year.
In addition to the hospitality sector, other areas of the real estate market in Thailand are also expected to see growth in 2023. The REIC suggests that high-quality prime office properties, logistics assets, and multifamily properties in select locations are good investments for those with a conformist approach and lower risk appetite. For those with a contrarian approach, the REIC suggests disposing of logistics and multifamily investments, which are expected to be in high demand, and using the proceeds to purchase hotels or retail properties. Retail properties, in particular, are expected to rebound as rents have largely bottomed out and are likely to increase in the coming year.
For those with a vintage investment strategy, the REIC recommends acquiring assets on the public market, such as real estate investment trusts (REITs) trading below their net asset value and other undervalued listed vehicles, as well as looking for debt investment and distressed opportunities or discounted blue-chip assets.
Overall, the REIC believes that each of these investment strategies can be successfully deployed in 2023, despite the global challenges that may arise. With the easing of mortgage requirements, the successful reopening of the country’s borders, and the availability of attractive real estate opportunities, Thailand’s real estate market is expected to experience a dramatic rebound in 2023, making it an excellent investment opportunity for both domestic and foreign buyers.
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