Bangkok: The real estate market in Thailand is experiencing a gradual recovery, but concerns persist about its future trajectory.
According to Thai News Agency, Siamese Asset Public Company Limited (SA) has highlighted the slow pace of recovery in the real estate sector, despite government interventions and the potential boost from lower interest rates. The high loan rejection rate, currently at 50%, is a significant factor dampening demand. SA warns that without accelerated easing of lending restrictions by the government and financial institutions, the sector could face further deterioration.
Mr. Kajornsith Singsansern, CEO of SA, commented on the market conditions, noting that the sluggish recovery aligns with the broader economic downturn. Government measures, such as reducing transfer and mortgage fees and relaxing Loan-to-Value (LTV) criteria until mid-2026, are positively impacting consumer purchasing power. Additionally, the possible 0.25% reduction in domestic interest rates at the upcoming Monetary Policy Committee meeting could be beneficial. However, he emphasized that such a reduction would primarily aid those with good credit, as Thai interest rates are already low, and a minor cut would have limited impact. Instead, he advocates for increased lending to developers and consumers as a more effective approach.
The upcoming election is another factor that requires attention. Without additional stimulus measures, particularly in loan approvals, the real estate sector might worsen. The real estate industry is closely linked to other sectors, such as construction and labor, and poor performance could have broader economic repercussions. Additionally, ongoing tensions on the Thai-Cambodian border might affect tourist confidence, impacting the real estate and accommodation sectors.
SA continues to attract foreign investors through its Serviced Apartment model and Investment Program, which offers a guaranteed yield of 5% per year for five years. This initiative has been well-received, particularly in high-demand areas like Sukhumvit and Rama 9, where rental demand from foreigners remains strong. With current home loan interest rates below 3% and rental yields around 5%, investors are seeing positive net cash flow from the outset.
The demand for serviced condo rentals is rising, especially among expatriates, including Japanese nationals who favor hotel-like services. SA’s serviced apartment model meets this demand effectively, underpinning the success of its Investment Program campaign. As the company adapts to market needs, it remains focused on providing consistent rental income through its strategic locations near the BTS Skytrain and in areas favored by foreign tenants.