The Work-From-Home policy, transportation route expansions and health-conscious living will become major factors in shaping the new normal in the Thai residential market as a result of the COVID-19 outbreak, according to CBRE.
Aliwassa Pathnadabutr, Managing Director of CBRE Thailand, said condominium developers were focusing on clearing out their unsold inventory while the housing market continued to attract end-user buyers.
"Since 2019, the condominium market has been affected by the Baht currency issue and the loan-to-value (LTV) measures," she said.
"Later, there were signs of market recovery and better understanding of the new Land and Building Tax regulations, but the sudden arrival of the COVID-19 pandemic has dampened the market, especially during March and April 2020.
"Even without the outbreak, the condominium market will develop equilibrium where the supply gradually slows down.
"The good news is almost no new supply is coming in to compete with the existing ones, with developers having turned their focus on selling their unsold off-plan and completed projects."
Ms Pathnadabutr added the single-detached housing market is less affected compared to the condominium market.
"The overall housing market has no speculative demand as most buyers are end-users who want to buy for their own living," she said.
"After the Thai government has relaxed its lockdown measures in the second phase, we now see more buyers visiting sales galleries and the sales performance is almost at the same level as pre-COVID-19."
Artitaya Kasemlawan, Director of Advisory & Transaction Services - Residential Sales, CBRE Thailand, said that while number of foreign buyers, especially the Chinese, had been declining even before COVID-19 due to the currency rate, demand from this buyer segment remained and was expected to make up major feeder market once the international travel restrictions had been lifted.
"CBRE has witnessed an increase of Chinese buyers in the luxury condominium market compared to 4-5 years ago when Chinese buyers would buy units in the range of THB 3 – 10 million," she said
"The second buyer group consist of short-term speculators that have now disappeared from the scene, accounting for 20-25 per cent of the total number of buyers prior to the outbreak.
"The third group are end-user buyers who still show continuous demand.
"This group of buyers now have greater time to consider projects and more developers are unveiling special offers.
"After the COVID-19 lockdown was lifted, the demand from this group has recovered very quickly to the pre-COVID-19 level."
Ms Pathnadabutr said buyers will require a considerable amount of time before they commit to property going forward, noting the recovery of the residential market would likely be divided into two phases.
The first is when business operations resume normally, as many have already begun, but with the international travel restrictions, this period will depend on demand from domestic buyers who are expected to take approximately 1-3 months in decision-making," she said.
"The essential factor is the overall sentiment of the business sector.
"If there are stimulus measures to boost spending, the market will recover faster, perhaps in the latter part of the third quarter of 2020.
"The second phase of the recovery would take place once international travel reopens, beginning with business trips followed by leisure travels, which could be seen in the fourth quarter based on this year’s forecast.
She added that location and hygiene considerations would characterise the Thai residential market going forward.
"Buyers will choose between the inner city and midtown/suburban areas," she said.
"As people are spending more time at home and working from home, the need for space usage will increase.
"Coupled with the mass transportation expansion outside the metropolitan area, some buyers will reconsider their housing choices in terms of value related to usable space.
"Developers and designers will also have to bear in mind changes in buyers’ behaviours and highlight specifications that advance health and convenience of life of residents when developing a future project such as usable area, air quality and new technologies."
"Examples include more compact sizes of condominium units; more efficient unit layouts; fully-fitted or fully-furnished provision; and higher quality of specifications."
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