Thai Real Estate Market Faces Intense Price Competition
Thailand's real estate market faces intense price competition as developers clear inventory and construction costs remain permanently elevated, though mid-market properties priced 4-8 million baht continue to perform relatively well.
Tritech Tangmetham, managing director of Supalai Public Company Limited, says the real estate market faces significant challenges this year with intense price competition as developers rush to clear existing inventory. New project launches have dropped sharply compared to previous years. "The market remains difficult with ongoing price competition, forcing developers to compete considerably. New projects this year will clearly be lower than last year," he stated.
Despite the overall market slowdown, the company expects sales can still grow, supported by buyers ready to purchase who see opportunities in competitive pricing. Construction costs have permanently increased by 5-6% compared to pre-war levels. Even if the conflict ends, costs may only decrease 2-3% but won't return to original levels. Supalai's own costs rose from about 15% last year to an estimated 17% this year.
The mid-market segment, particularly homes and condos priced 4-8 million baht, remains relatively strong. The upper market continues to struggle with oversupply but limited demand, particularly affected by declining foreign buyer purchasing power and stricter land ownership controls through corporate entities.
The condominium market shows better recovery prospects than single-family homes due to consistently declining new supply over recent years. Building permit applications dropped from 12-14 projects per review cycle historically to just 2-4 projects now—roughly one-sixth of previous levels. Land prices need to fall another 10-20% before developers will commit to purchases. Currently, only about 4 major buyers remain in the land acquisition market, down from the many project developers competing previously.