The Thai Real Estate Market: A Year of Reckoning and Realignment
Siam International News (Admin)- May 6
- 4 min read
A Historical Perspective
Over the past three decades, Thailand’s real estate sector has seen multiple cycles of boom and bust, shaped by both domestic economic conditions and global events. In the 1990s, Bangkok experienced its first high-rise condominium boom, driven by foreign investment and rapid urbanization. However, the 1997 Asian Financial Crisis brought the market to a halt, leading to oversupply and stalled developments for years.
Recovery came in the mid-2000s with a growing middle class, low interest rates, and expanding infrastructure projects. During this time, suburban housing and inner-city condominiums both flourished. After the 2008 global crisis, Thailand’s real estate market remained relatively resilient, supported by strong fundamentals and domestic demand. Between 2015 and 2019, developers aggressively expanded into new segments, including luxury condos and mixed-use mega projects.
However, the COVID-19 pandemic in 2020 triggered a sharp slowdown. Lockdowns, job losses, and weakened consumer confidence led to project delays, declining transactions, and rising unsold inventory. The sector began recovering in 2022, though unevenly across different market tiers.
The State of the Market in 2025
As of early 2025, the Thai real estate market stands at a critical juncture. Recent data reveals widening gaps between supply and demand, particularly in the lower-end housing segment, where units priced between 1-3 million baht comprise roughly 30% of total inventory. Yet, up to half of mortgage applications in this segment are now being rejected, signaling a serious affordability crisis.
Credit Bureau statistics further highlight rising non-performing loans (NPLs), especially from low-to-middle income borrowers who are struggling with soaring living expenses and tighter lending conditions. More than 120 billion baht in potential bad debt now stems from mortgages below 3 million baht — a figure that hints at possible systemic risks.
Diverging Paths: Optimism vs. Caution
On the institutional side, the Government Housing Bank (GHB) projects a 14% decline in new mortgage originations for 2024 due to sluggish economic activity and weaker borrower profiles. However, it expects moderate recovery in 2025, with loan growth of around 3%, buoyed by low-interest housing loan packages.
Meanwhile, independent analysts like ttb analytics and SCB’s Economic Intelligence Center (EIC) present a more cautious view. Both warn that 2025 could be the toughest year for low-rise housing in over a decade due to persistent structural issues — notably, the faster growth of property prices compared to household income. The number of property transfers has dropped for six consecutive quarters and is projected to contract further until mid-2025.
High interest rates, strict loan criteria, and elevated construction costs (particularly for land in Bangkok and major provinces like Phuket) continue to constrain market growth. SCB EIC also notes that demand remains soft across both urban and rural regions.
Opportunity in Adversity
Despite these challenges, developers like Sansiri remain optimistic. They believe the condominium market will rebound in 2025 after several years of under-supply. Ready-to-move-in condo stock is now limited, especially near mass transit lines, making them more attractive to urban professionals and younger buyers.
Sansiri also expects growing interest in eco-friendly and energy-efficient housing — a trend influenced by rising electricity prices and climate concerns. Projects tailored to foreign residents, particularly near BTS and MRT lines, could benefit from the government's extended visa programs and investment incentives.
However, regulatory constraints — such as the 30-year leasehold cap for foreigners — still limit Thailand’s appeal compared to regional peers like Malaysia or Vietnam.
Market Consolidation and Shifting Demographics
Executives at AP (Thailand) suggest that prolonged economic stagnation is leading to market consolidation. Large, financially secure developers now have a distinct edge in accessing capital, negotiating with suppliers, and acquiring distressed assets. AP, for instance, is leveraging its low debt-to-equity ratio and 17 billion baht in credit lines to expand operations strategically.
New consumer behaviors are also reshaping the market. With many Thais delaying marriage or choosing not to have children, there is a growing trend of “pet parenting.” This has prompted developers to design homes with pet-friendly features — a small but telling sign of shifting lifestyle priorities.
AP also sees potential in the second-hand housing market, particularly in city centers where new supply is limited. Its new business line, HOMERUN, aims to renovate and resell prime-location resale homes — a niche expected to grow as affordability remains strained.
The Road Ahead
Looking forward, the real estate sector’s recovery will depend heavily on broader economic conditions, government stimulus policies, and household debt management. A sustained increase in domestic purchasing power remains essential.
Developers are calling for more aggressive intervention, such as extending soft loans to mid-range buyers (up to 10 million baht) and relaxing lending rules. Without these measures, many warn that real estate — which directly and indirectly accounts for up to 15% of Thailand’s GDP — could underperform, dragging down the broader economy.
In addition, geopolitical shifts — including increased foreign interest in Thailand as a regional base — may provide new growth avenues. If immigration policies are modernized and property ownership rules for expats relaxed, demand for both urban condos and suburban homes could rise significantly.
Thailand’s real estate market in 2025 reflects a decade-long transition — from fast-paced growth to a period of structural recalibration. The path ahead is uncertain but not without promise. Developers must adapt to changing consumer needs, technological innovation, and macroeconomic headwinds. For policymakers, the challenge lies in ensuring inclusive housing access while sustaining economic growth.
Whether this moment becomes a turning point or a prolonged slump will depend on the decisions made today.
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