Future of Bangkok’s property sector relies on how soon third Covid wave can be controlled
The property sector in Bangkok and its vicinity will either grow or contract by 5 to 6 per cent depending on how successfully the government tackles the third wave of Covid-19 infections, property consultancy firm Lumpini Wisdom and Solution (LPN Wisdom) said.
Prapansak Rakchaiwan, managing director for LPN Wisdom, said the third wave has had a direct impact on the economy, including the property sector.
He explained that there are three scenarios in line with the central bank’s economic growth forecast:
Best-case scenario: If the government can contain the spread of Covid-19 within a month, reopen the country to foreign tourists by July and distribute Covid-19 vaccines as scheduled, then the property sector will grow by 5 to 6 per cent compared to the previous year.
In this scenario, 75,000 to 76,000 new units worth a total of THB292 billion to THB298 billion should be launched in Bangkok and its vicinity this year, while economic growth is expected to hit 3 per cent year on year.
Not-so-good scenario: The government contains the spread of Covid-19 by the second quarter this year, resulting in a slowdown in tourism recovery, then growth in the property sector will be similar to the previous year.
Some 70,000 to 71,000 new units worth a total of THB270 billion to THB280 billion should be launched and economic growth is expected to contract 0.5 per cent year on year.
Worst-case scenario: If the Covid-19 situation cannot be controlled and the foreign tourists are still not able to land in Thailand, then the property will contract by 5 to 6 per cent compared to the previous year.
Only some 65,000 to 66,000 new units worth THB260 billion to THB265 billion would be launched in Bangkok and its vicinity this year, while economic growth is expected to contract 1.7 to 2 per cent year on year.
“We don’t expect the worst-case scenario to happen, but if the Covid-19 situation does get out of hand and the vaccines cannot contain the spread of the virus, it will have a direct impact on the overall economy and people’s purchasing power,” Prapansak said.
He added that if the government launches measures to stimulate the property sector, such as allowing foreigners to own more than 49 per cent of condominiums, or buy houses under specific conditions, then it will help stimulate demand.
He said 8,285 units worth THB37.71 billion were transferred to foreigners last year, down 35.3 per cent and 25.5 per cent compared to 2019, according to the Government Housing Bank's statistics.
"This shows that despite travel restrictions, foreigners still want to buy homes in Thailand,” he said.
He added that only 9,688 units were launched in Bangkok and its vicinity in the first quarter of this year, down 45.72 per cent year on year.
"However, the total value was THB70.15 billion, up 0.81 per cent year on year," he said.
Meanwhile, the average sales of new units in the first quarter this year was 20 per cent, higher than 16 per cent last year, he added.