Countdown to crisis: Thailand’s real estate bond market faces a shock greater than earthquake

March 28 is remembered by many as the day of a major earthquake in Thailand. But for real estate developers, it may be remembered as the first tremor in a year filled with looming financial storms. The Thai economy in 2025 is under pressure from all sides: a global economic slowdown, natural disasters, and retaliatory U.S. trade policies that have taken a toll on exports, leading to a downward GDP revision. These pressures indicate that the property market this year is not just "sluggish"—it is critically ill.

Although the government has rolled out stimulus measures, such as reducing transfer and mortgage registration fees and easing LTV rules, these came too late—at a time when market confidence and liquidity were already drying up. The shock was evident in Q1 figures: property transfers fell short by 32%, down to 32 billion baht from the target of 47 billion.

One key reason: the late-March earthquake caused consumers to delay purchase decisions and forced some construction sites to halt temporarily. Financial institutions, in turn, began tightening credit—marking the potential beginning of a crisis that could spill into the bond market.

According to Prasert Taedullayasatit, President of the Thai Condominium Association, over 266 billion baht in real estate bonds will mature between April 2025 and December 2026. A significant portion of these are high-risk, either high-yield or unrated. Even investment-grade bonds are struggling to gain investor confidence.

If no new capital enters the system, the Thai market could see its first major real estate bond default. Such an event could trigger a domino effect, severely shaking investor confidence and spreading risk across the financial system. This is why three major real estate associations have urgently submitted proposals to the government, emphasizing one critical need: liquidity.

What is needed now is not just a mild remedy, but a full-scale economic intervention. The sector is calling for immediate measures, including soft loans, relaxed credit rules from the Bank of Thailand, and special refinancing programs to inject liquidity quickly and prevent systemic collapse.

Without new money circulating, the real estate sector faces a breakdown in its cycle: buyers won’t buy, developers can’t invest, banks won’t lend, and investors will flee. What the market needs now isn’t just policy—it needs decisive action.

In the first two months of 2025, property transfers were already down 16%, and new condo launches plummeted 45% compared to the end of 2024. Q2 is expected to see another 6% decline in launches, with Q3 projected to drop by 34% from Q2. Even if Q4 sees a slight recovery, it will still be 50% below last year’s levels. These figures show that the sector is "walking in the fog"—the path ahead is uncertain, and every step is risky.

Some may see real estate as just another industry, but in reality, it’s the heart of the economy, connecting labor, consumption, production, and finance. If this heart fails, other systems may collapse in turn. The year 2025 is not just a challenging year—it is a crucial test for Thailand’s property market.

The pressing question is: Will we wait for collapse—or act fast enough to prevent it?