Although developers have recently increased their launches of condominiums, sales to Thai buyers have slowed in some locations and are likely to slow further with the coming imposition of tighter mortgage lending. In Bangkok, some developers are trying to find locations where there is real demand from Thai end-users and develop projects that buyers can afford. Others have increased their reliance on foreign sales where there is uncertainty as to who will be the final occupier. The downtown expatriate rental market is stable, but CBRE thinks the local rental market in the midtown/suburban areas is quite flat, so buy-to-rent investors may not achieve the yields they were expecting.

What can be said for the Phuket market?

The Bank of Thailand has recently imposed tighter regulations on mortgage lending by reducing loan to values (LTV) for certain categories of purchasers in an effort to curb mortgage and property market risks and improve housing loan quality. Effective from April 1, 2019, these new measures will favour first home buyers with genuine demand as opposed to buy-to-rent investors with multiple outstanding mortgages, who are searching for yield. Although the new regulations will not force developers to collect minimum down payments at contract signing, it will encourage them to collect higher down payments to reduce the risk of loan defaults upon transfer. This will reduce the demand from speculative buyers as they will be required to pay up to 20-30% for the down payment from today’s 10-15%. These measures will certainly cool down and stabilize the overall market situation.

As domestic demand is expected to shrink as a result of the new mortgage restrictions, CBRE anticipates a domino effect where developers will further shift their reliance towards foreign buyers, who purchase primarily with their own funds, as all the money must come in from overseas as foreign currency to comply with the foreign condominium ownership regulations. Many developers have reported that they have increased foreign condominium sales, particularly to Chinese buyers, both in the form of individual purchases and bulk purchases by Chinese property agencies. Several projects in Bangkok have revealed that they have reached their limits of foreign ownership quota (49% of the saleable area) which has been a very rare occurrence in the past.

Similar to this:

Thailand property taxes

Buying real estate in Thailand