Buoyed by robust domestic demand and persistent foreign interest in Thailand as both a desirable location for vacation homes and a commercial base within the ASEAN community, the Thai real estate sector continues to perform well even in the face of slowing regional economic growth. In late 2015 the sector showed a significantly improved outlook on the back of the Thai government’s stimulus measures, while construction has been stepping up to meet steadily rising demand for residential, retail and office space. Nationwide land and building transactions rebounded after a difficult year in 2014, improving to a high of BT1.07trn ($32.2bn) in 2015, compared to BT969.1bn ($29.2bn) the previous year, according to Bank of Thailand (BOT) data. This valuation bested the previous high of BT1.01trn ($30.4bn) set in 2013 and is five times greater than the BT193.8bn ($5.8bn) worth of transactions posted in 2000.

Centre Of Attention

Activity remained heavily focused on Bangkok and the surrounding areas in 2015, with demand for premium Bangkok central business district (CBD) sites and other prime income-producing properties holding strong and few high-value properties being offered up for sale. In 2014, the latest year for which annual figures were available, the Central Region, which includes Bangkok and the surrounding area, accounted for a whopping 63.2% of total land and building transactions, according to BOT data. This trend continued into 2015, with the Central Region accounting for around 62% of transactions in the third quarter of the year. In 2014 the next-largest concentration of real estate deals took place in the Eastern Region, which accounted for 12% of the national total, followed by the North-Eastern Region with nearly 9%, the Northern Region with 8.4% and the Southern Region with 7.4%. Nuttawut Phowborom, CEO of KPN Group, told OBG, “Real estate development in Thailand’s secondary cities and provinces remains muted. While locales such as Hua Hin are doing well in feeding off Bangkok’s increasingly affluent population, land prices elsewhere, especially in the south and north-east, have been stagnant.”

Looking outside the key Central Region, industrial expansion has led to sustained growth in traditional industrial parks, as well as in new areas bordering on neighbouring countries to the north. This economic and industrial growth has also had a ripple effect on other localised real estate sectors in the retail, commercial and residential segments. At the same time, the extension of transport infrastructure and the increasing purchasing power of Thailand’s growing middle class are also opening up new opportunities in suburban markets and other pockets within the city.

Stimulating Demand

In addition to conventional market-driven demand growth based on economic and population growth, the real estate sector has also benefitted from the government’s economic stimulus packages rolled out in 2015. This was kicked off in October 2015 when the Cabinet announced it was slashing both the real estate transfer fee and mortgage registration fee to 0.01% for six months, from previous rates of 2% and 1%, respectively, for homes priced at BT3m ($90,300) or less. The cuts are restricted to only developer-built residential properties that have been completed, with transfer-of-title taking place between October 2015 and April 2016. The Cabinet also approved a bill allowing first-time buyers who purchase a home below the same BT3m threshold to deduct 20% of the value of the home from their annual personal income tax over a five-year period, although with the caveat that the owner must occupy the property as their principal residence for five years and must take possession of the title before the end of 2016. Applicable to both new and resale properties in Thailand, these cuts took effect in October 2015.

In another move to create more buoyancy in the market in order to counterbalance more restrictive lending criteria now imposed by banks, the government also directed the Government Housing Bank to issue loans totalling BT10bn ($301m), as well as offering special interest rates to those who earn less than BT30,000 ($903) per month. Property purchasers in this category are also permitted to borrow more money, with the debt service ratio raised to 50% of monthly income, from 30% previously. Overall, these policies are focused on clearing excess inventory in the market rather than stimulating demand for new projects, and as such are not likely to substantially affect overall demand in the residential market.

Tax Changes

Fears that amendments to an unrelated tax, the new inheritance tax, would send tremors throughout the market were also alleviated when the government released details of the change in February 2016.

The new tax will only be charged to beneficiaries inheriting more than BT100m ($3m) in immovable assets, cash, shares and vehicles, and not on the total value of the deceased’s estate, at a rate of 5% for “lineal relatives” and 10% for others, according to a report from tax consultancy Deloitte. These clarifications assuaged concerns that the tax would force many asset-rich but cash-poor landowners to sell land and property upon inheritance, thus creating even greater inventory on the market. The high tax-free allowance and low rate of tax charged even when it is applicable means that this is unlikely to occur.

Through the early months of 2016, these property tax stimulus efforts appeared to be paying dividends as housing developer sentiment was boosted in the last quarter of 2015 and into early 2016, according to Thailand’s Real Estate Information Centre (REIC). A survey of 168 developers carried out by REIC in 2015 showed that the developers’ sentiment index edged upwards in the fourth quarter of 2015 to 54.6, from 52.2 in the third quarter of the same year. The developers’ expectations index, meanwhile, rose from 66.3 in the six months prior to January 2016 to 67.2 for the six-month period following.


Since the base year starting date of January 2009, Thailand’s housing price index has increased by an average of 6.1% per year, accumulating a 44.2% jump over the second half of 2015, according to BOT data. Land prices exhibited the most substantial growth, spiking by 11.2% in 2015 to an index level of 157.2, and contributing to an average annual growth rate of 7.5% between 2009 and 2015. The condominium subset ranked a close second, with 6.9% average annual growth over the same six-year period, with the index topping out at 155.6 in 2015. Prices for townhouses, meanwhile, increased by an average of 5.3% each year over this same period, followed by single-detached houses at 4.5%, resulting in 2015 price indexes of 135 and 129, respectively.

The higher growth rate for the condominium market is the result not only of growing demand in the city, but also of the fact that units remain a popular investment tool in the domestic market, as individuals purchase properties in popular areas for the purpose of collecting rental income. The percentage of buy-to-rent investors for new downtown condominiums was estimated at 30-40% in December 2015 by international real estate consultancy CBRE, representing a significant portion of the overall market.

Town Centre

Although steady demand growth for housing in Bangkok is fuelling the development of large new residential projects further and further outside of the traditional city centre, as well as in previously undeveloped pockets, the most desirable location remains the city’s bustling CBD neighbourhood. The recent slowing of economic growth in the country has had little effect on demand for prime Bangkok CBD sites and other desirable properties, even with a limited supply of prime real estate for sale on the market in 2015.

Big Hit

Following the hiccup of 2014, when the value of land and building transactions declined temporarily, property deals have come roaring back – as evidenced by the record land prices achieved in 2015. The BT2.3bn ($69.2m) paid by the SC Asset Corporation for the roughly half-hectare site in the Chidlom area of the CBD, for instance, worked out to $13,194 per sq metre for the future high-rise condominium project, according to CBRE. These premium prices reflect the relatively restrictive low-volume-value market of the area, which differs from the midtown and suburban condominium markets where there are more than 400,000 completed units. As a whole, the condominium market in this district continued to exhibit the strongest growth in 2015 within Greater Bangkok, with the housing index for the subsector climbing 5.1% on the year, according to data from REIC. Within the condominium market the greatest year-on-year (y-o-y) bump of 6% was for units within a range of BT80,001-120,000 ($2400-3610) per sq metre, followed by a rise of 4.9% for those priced higher than BT120,001 ($3610) per sq metre. Districts with the highest increase in condo prices were lower Sukhumvit, Pathumwan, upper Sukhumvit, Nonthaburi and Krung Thon Buri. By contrast, other residential segments have grown at a more modest rate ,with the price of townhouses increasing 3% on the year, while single home prices increased 2.3%.

Unlike in many other South-east Asian nations which have become trendy real estate investment flashpoints, the Thai real estate market is largely domestically driven, with less exposure to foreign capital. The relatively small numbers of international buyers of property in Thailand – many of them hailing from Hong Kong or Singapore – are concentrated primarily in the luxury property sector, where prices generally exceed $300,000 per property, according to CBRE.

Office Space

Robust economic growth over the past decade has fuelled a steadily escalating demand for office space in Thailand, primarily in the capital city, but also increasingly in other areas of the country as trade liberalisation has pushed demand in secondary cities as well. As the financial heart of the country, Bangkok remains at the epicentre of the office space segment, and demand remains high in premier business districts of the city. With supply in these premium locations limited by a lack of new space coming on-line in 2015, the office market in Bangkok is recording its highest occupancy rate in years, on the back of strong demand from both multinational and Thai companies. The majority of office buildings in the CBD, as well as downtown along the Phahonyothin and Ratchadapisek Roads, were operating at near 100% occupancy in 2015, with Grade A and all newer office buildings doing particularly well, according to Colliers International’s fourth quarter 2015 report on Bangkok office space.

The overall vacancy rate of the Bangkok office market stood at 8.8% in the third quarter of 2015, following a steady decline from 2001 when nearly 30% of office space sat unoccupied, according to CBRE. As of September 2015, total office supply increased to 8.4m sq metres, a 1.5% y-o-y improvement due in large part to the addition of the AIA Sathorn Tower and Bhiraj Tower at EmQuartier, which were both completed in 2015. Around half of this stock (4.18m sq metres) is located within CBD, including 1.25m sq metres of Grade A space, according to CBRE. Colliers’ report added that a little more than 100,000 sq metres of new office space hit the market in both 2014 and 2015, substantially more than in the previous two years.

This growth trend is expected to continue with a handful of new projects already under construction and poised to add nearly 400,000 sq metres of new office space, most of it Grade A, by 2018, according to CBRE. Some of the major projects slated to be up and running over the next few years include the FYI Centre, The Metropolis and Gaysorn Office Tower 2, all located within CBD. Of the cumulative total area of approximately 374,000 sq metres expected to be added by the end of 2017, around 80% will be Grade A office buildings and about 30% of the new office space will be in CBD. The completion of these projects over the next three years would bring the total volume of Bangkok office space to 8.8m sq metres – over 1m sq metres more than just a decade ago.

Due to increasingly high land prices within the traditional business district, many of the new office projects planned for the city are being built outside CBD, such as the intersection of the Ratchadapisek and Rama 9 Roads and the area along the Sukhumvit and Phahonyothin Roads, according to Colliers. The Ratchadapisek/Rama 9 area is rapidly coming into its own as a less expensive extension of CBD. The sector has become a beehive of activity in recent years as developers scramble to put up new office buildings that now include G Land Tower, the Stock Exchange of Thailand’s new head office and the Rungrojthanakul 4 projects, all under construction in 2015. Plans for yet another skyscraper to be located next to the G Land Tower at the Ratchadapisek/Rama 9 intersection are also in the works in the form of the 125-storey Super Tower, with 90,000 sq metres of office, retail and convention centre space.


Continued economic growth and Bangkok’s attractiveness to foreign businesses and individuals should sustain property demand going forward, even with new stock across all sub-sectors set to hit the market in the coming years. Organic demand for residential property will also be boosted in the short term as a result of government efforts. Within Bangkok, prime real estate value for the retail, office and residential segments within the CBD should remain robust due to the restricted supply, as only a limited number of vendors are available to sell land in the most exclusive downtown areas, leading to fierce competition. Strong demand for property along existing and planned mass transit routes will likewise raise property values along these corridors, although to a lesser extent than in the CBD. Though a handful of new, large office projects will bring new stock onto the market over the next three years, demand for office space as a whole is expected to remain strong, due in part to Bangkok’s favourable reputation among foreign investors looking to extend their investments into other ASEAN countries.