When a strange unknown virus broke out in the Chinese city of Wuhan early 2020, there was fear that Thailand was especially vulnerable due to the large number of travellers it receives from China. As it happened, by the end of January, the kingdom had the second highest number of cases outside of China. As months passed, it has now largely brought the virus under control and had won global praise for its response. While the coronavirus has caused many more deaths in other parts of Southeast Asia particularly the Philippines and Indonesia, the Kingdom seems to have managed it well. As of mid June2020, it recorded slightly over 3,000 cases and less than 60 deaths. There has been no local transmission in the country for the past three weeks. Lockdown has been eased and curfew lifted. In Bangkok, cars once again hog the roads. Markets, restaurants and the ubiquitous massage shops have come back.
Regardless, the Thai economy is badly hammered by the virus. 2020 GDP is expected to shrink 4%-6%. The tourism sector has suffered tremendously. By some forecast, Thailand will likely see no more than 10 million tourist arrivals this year, compared with 40 million in 2019.
The Thai real estate market which accounts for 6% of GDP is equally battered. The property downturn actually started 2019 due to a potent combination of global slowdown resulting from trade wars brewing everywhere, a slowed Chinese economy, a weak yuan and a strong baht. Some developers rely heavily on Chinese buyers who account for half of all foreign purchases of condominiums. The ongoing international flight ban means Chinese investors have all but disappeared. Many developers have delayed launches and offer discounts on unsold units.
Relief may soon come from countries eager to form travel bubbles with one another to boost their economy. Thailand is in talks with China/Hong Kong/Macau, Japan/Korea, Australia/New Zealand and Singapore to form travel bubbles to allow limited travel. With gradual lifting of international travel ban, tourists – and property buyers, especially the Chinese – could return as soon as the end of the year.
In the long run, foreigners (tourists and retirees alike) are still drawn to Thailand for its affordability, good living standards, advanced healthcare system and its friendly people. Bangkok remains an attractive destination for property investors as it provides strong rental yields, price appreciation potential, and has no limits on minimum purchase price.
But for now, most economists expect any visible recovery only next year. For the rest of 2020, developers and individual sellers just have to rely more on local buyers and reach out to non-resident foreigners who are already familiar with the country and may have been previous property buyers. Landlords of well-situated properties should continue to be able to secure good tenants so long as they tamper their expectations. As the real estate adage goes: Location, location, location.