Thailand's Property Market 2025: Navigating Crisis Whilst Developers Chart Bold 2026 Strategies

 

As 2025’s seismic and economic shocks subside, developers abandon the mass-market playbook in favour of luxury niches, 99-year leases, and regional hubs.

 

Thailand's property sector has endured its most punishing year in decades throughout 2025, with household debt, stringent lending conditions, and collapsing purchasing power battering the market.

 

Yet major developers are unveiling distinct 2026 strategies—from luxury pivots to multinational expansion—whilst economists warn that structural headwinds will persist.

 

 

 

Market Contraction Accelerates

The numbers reveal stark distress. KKP Research projects nationwide property transfers will decline 6 per cent in 2025, following a 15 per cent drop in 2023 that pushed volumes to a seven-year low.

 

In Bangkok and surrounding areas, transfers fell 15 per cent in the first eight months versus 2024, with new-build properties from developers declining an estimated 20 per cent.

 

The Real Estate Information Center (REIC) reported first-quarter 2025 residential transfers plummeted 10.52 per cent year-on-year to 65,276 units, with values declining 13.02 per cent.

 

New housing sales in the first half collapsed 49 per cent to just 28,884 units worth 197.7 billion baht. Market forecasts suggest total value could sink to 700 billion baht by year-end, the steepest decline since the 1997 crisis.

 

Mortgage rejection rates hit unprecedented levels.

 

According to Terra Media and Consulting, rejections for homes under 3 million baht reached 70 per cent.

 

Piyaporn Lertwisuttipaiboon, market research manager at Terra Media, stated these figures represent "the most persistent issue the Thai property market has faced in years: the inability of mass-market buyers to secure financing."

 

 

 

 

 

"The current residential market is in a slowdown and cannot generate sales as it did in the past," warned Kornthip Puckprasurtdee, real estate data researcher at KKP Bank.

 

Sales of single detached and semi-detached homes fell 15 per cent in 2025, with 3,000 unsold units in the 25-50 million baht bracket representing five to six years' supply.

 

 

Economic Malaise Deepens

The crisis sits atop broader stagnation. Pipat Luengnaruemitchai, chief economist at KKP Research, forecast GDP growth of just 1.6 per cent in 2026, down from 2.0 per cent in 2025.

 

"We use the term 'old blessings are weakening, new blessings have not arrived'. This situation is likely to continue in 2026," Pipat stated.

 

Thailand's household debt reached 16.34 trillion baht—89 per cent of GDP—constraining buyer capacity.

 

"Weak economy leads to banks restricting credit, which leads to weaker consumption in cars and housing, which further weakens the economy," Pipat explained, describing a vicious cycle trapping the sector.

 

He warned Thailand's GDP per capita of approximately 7,000 dollars is being rapidly overtaken by the Philippines and Vietnam.

 

"We are currently the second-largest GDP in ASEAN, but in a few years, we will drop to fifth place," he cautioned.

 

 

 

Government Intervention

Recognising the distress, authorities implemented emergency measures.

 

The Bank of Thailand relaxed loan-to-value rules from May 2025 through June 2026, permitting loans up to 100 per cent of collateral value for first homes over 10 million baht and second homes under 10 million baht.

 

The government slashed transfer fees from 2 per cent to 0.01 per cent and mortgage registration fees from 1 per cent to 0.01 per cent for properties up to 7 million baht.

 

 

Industry calls for legislative reform to extend foreign leasehold rights to 99 years intensified.

 

Poomipak Julmanichoti, chief strategy officer at Sansiri, argued at the Thailand Economic Outlook 2026 seminar that "extending the lease is the new engine required to stimulate investment, increase access to credit, and boost capital flow into the system."

 

However, the government shelved the proposal in September 2025, focusing instead on immediate stimulus including 50 per cent reductions in land and building taxes for 2026.

 

 

 

Regional Divergence: Phuket Shines

Whilst Bangkok grapples with oversupply—ending 2024 with approximately 235,000 unsold condominium units—regional markets diverge dramatically.

 

According to KKP Bank, growth markets include Phuket, Surat Thani (Koh Samui), Prachuap Khiri Khan (Hua Hin), and Nakhon Ratchasima.

 

Phuket stands out, maintaining steady absorption of approximately 1,000 condominium transfers to foreign buyers annually, with 10 per cent year-on-year growth in 2025.

 

Significantly, the island is witnessing a shift from short-term holiday homes to long-term family residency, driven by rapid expansion of international schools.

 

Analysts forecast Phuket could achieve 8-10 per cent annual price growth through 2026, outpacing Bangkok's projected 5-7 per cent.

 

Foreign buyers show dramatically different geographic patterns.

 

Transfers fell sharply in Chonburi (-15 per cent) and Chiang Mai (-28 per cent), but surged in Bangkok (+9 per cent), Prachuap Khiri Khan (+66 per cent), and Surat Thani (+220 per cent).

 

Properties along mass transit lines commanded significant premiums, with developments near the Blue Line, Gold Line, and Orange Line achieving 6-7 per cent price increases. Inner Bangkok land prices surged 17.8 per cent year-on-year in select locations.

 

The industrial real estate sector emerged as a bright spot, with technology giants including TikTok and Amazon Web Services committing billions into data centre infrastructure.

 

Krit Pimhataivoot, country head at JLL Thailand, stated: "Data centres are clearly the star performers of 2025."

 

 

 

2026 Forecasts: Cautious Optimism

Kiatnakin Phatra Securities anticipates a mild cyclical rebound following 2025's deep trough—Bangkok and vicinity presales hit a 23-year low.

 

The brokerage highlights that whilst 2025 marks the sector's bottom, recovery will be modest and primarily benefit large, well-capitalised developers.

 

Throughout 2025, the sector traded at trough valuations, with price-to-earnings ratios between 7.0x and 8.3x—levels last seen during the 2008 crisis and 2020 lockdown.

 

KKP's forecast for 2026 anticipates continued contraction, albeit slower at approximately 6 per cent.

 

Unsold inventory is projected to fall 6 per cent to around 207,998 units as developers hold back on large-scale launches.

 

Vissarut Panyapinyopon, real estate lending head at KKP Bank, advised developers: "Look at your own wallet and see if you can withstand slower sales, then reduce project size appropriately."

 

JLL Thailand highlights that market volatility will drive strategic imperatives throughout 2026.

 

Anawin Chiamprasert, head of research and consultancy, notes that "forward-thinking investors and developers are rethinking their real estate portfolio strategy and prioritise asset enhancement, repositioning and conversion."

 

JLL expects industrial and warehouse properties to remain amongst strongest performers in 2026, supported by healthy logistics demand. Key indicators show relatively stable vacancy rates at 11.0 per cent as of third-quarter 2025.

 

CBRE Thailand maintains that the residential sector will remain heavily reliant on the domestic market.

 

The consultancy forecasts downtown condominium asking prices to reach 315,000 baht per square metre by end-2025, representing modest 1.61 per cent year-on-year growth.

 

Midtown and suburban areas are expected to record only marginal gains at 110,500 baht per square metre (+0.20 per cent) and 84,000 baht per square metre (+0.85 per cent), respectively.

 

Colliers International reveals a decisive shift in global capital towards Asia Pacific, with technology, ESG criteria, and tenant experience remaining core value drivers.

 

REIC projects marginal cooling in 2025, forecasting total residential transfers to decline 0.3 per cent in volume and 0.8 per cent in value versus 2024.

 

The centre forecasts gradual recovery from second quarter 2026, contingent on sustained government support, projecting residential sales could increase 2-3 per cent annually through 2026, averaging approximately 83,000 units, though below pre-pandemic levels.

 

Independent analysts offer mixed views. Property DNA managing director Surachet Kongcheep projects 5-7 per cent annual price increases, whilst Athip Pichanon, honorary president of the Housing Business Association, forecasts more conservative 2-3 per cent growth.

 

 

 

Structural Challenges Persist

Beyond cyclical pressures, Thailand's market confronts structural headwinds.

 

The demographic transition towards an aged society will reduce demand, whilst the shrinking working-age population—the market's primary driver—will further erode it.

 

Rising construction costs, particularly for prime location land, combined with persistent labour shortages, generate price rises outpacing income growth.

 

Listed developers face mounting pressure from over 156 billion baht in debt maturing within the year, forcing aggressive pricing strategies whilst limiting new project feasibility.

 

Project loans to developers declined approximately 20 per cent by year-end 2025.

 

For 2026, KKP Bank will focus on existing clients—large listed companies and experienced SMEs—avoiding aggressive expansion contrary to industry conditions.

 

 

 

Opportunities Amid Adversity

Despite challenges, emerging opportunities exist. The sub-5 million baht residential market continues showing strong demand.

 

Alternative financing solutions beyond traditional bank loans—hire-purchase or rent-to-own schemes—could unlock substantial purchasing power.

 

Board of Investment applications surged to historic levels, with first-half 2025 applications totalling 1.08 trillion baht and promotion certificates exceeding 600 billion baht, representing 49 per cent year-on-year growth.

 

These investments, concentrated primarily in the Eastern region, will create employment centres ultimately generating residential demand.

 

The government's 2025-2026 transport plan covers 287 projects valued at 253.45 billion baht, channeling outlays toward light-rail links in Phuket and Chiang Mai, expanding the development canvas.

 

The shift towards rental properties and co-living spaces presents another avenue. Younger generations increasingly lean towards renting over buying, driving developers to focus on flexible, affordable rental properties.

 

Healthcare-focused developments gain traction as Thailand's ageing population drives demand for medical real estate and retirement living spaces.

 

The Thailand Real Estate Market size is estimated at 58.78 billion dollars in 2025, expected to reach 77.15 billion dollars by 2030, representing 5.59 per cent compound annual growth, suggesting long-term structural growth despite near-term headwinds.

 

 

 

 

Looking Forward

As Thailand's property sector navigates through 2025's turbulence into 2026, the industry stands at a crossroads.

 

Immediate challenges—high household debt, restricted credit, weak purchasing power—require sustained policy support and innovative developer responses.

 

Market bifurcation between struggling mass-market segments and resilient luxury developments will likely persist.

 

Success in 2026 depends on developers' ability to read shifting preferences, identify demand pockets, and maintain financial discipline whilst positioning for eventual recovery.

 

Vissarut's message to developers was unequivocal: the era of mass-market, large-scale projects is over, and survival depends on financial prudence, hyper-specific targeting, and thinking smaller. The mass-market playbook of the past is obsolete.

 

Whilst the path remains challenging, Thailand's fundamental attractions—strategic location, robust tourism infrastructure, improving connectivity—ensure the sector's long-term viability.

 

The question is not whether recovery will come, but how quickly, and which developers will emerge stronger.

 

For investors, buyers, and stakeholders, 2026 promises strategic repositioning, where careful navigation of persistent challenges could unlock opportunities for those with patience, capital, and clear vision.