Thailand: Opportunities and risks of real estate investment

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Thailand’s housing market in 2025 continues to see price growth amid weak demand. In Q2, the index rose by 2.71% y/y, driven by higher land and construction costs. Global Property Guide’s review notes that developers are acting cautiously, scaling back new launches and focusing more on selling completed stock.

Price dynamics

In southern Thailand, Q2 2025 prices were up 5.48% from the same period of 2024—the highest rate in the country. The north saw the smallest increase, just 1.84%. In the capital region, prices rose 2.54%, slightly below the national average. By segment, townhouses led with nearly +5% y/y, while detached houses and condominiums increased by 1.5% and 1.43%, respectively.

Experts expect moderate growth to continue through 2025. Athip Pichanon, honorary president of the Housing Business Association, forecasts +2–3%, stressing the decisive role of land prices. A more upbeat scenario comes from Property DNA managing director Surachet Kongcheep, who allows for +5–7% annually.

Demand and the role of public policy

Weak demand remains the key feature. According to the Real Estate Information Center (REIC), in Q1 2025 the number of transactions fell 10.52% to 65.3k units, while total value declined 13.02% to THB 181.5 bn (about $5.4 bn).
To support the market, the authorities temporarily reduced registration fees for transactions and mortgages to 0.01%, and the Bank of Thailand eased LTV requirements. Analysts expect these measures to stimulate activity in H2.

Foreign demand is comparatively resilient. The number of condominium deals registered to foreign buyers fell only 0.48% y/y, while their share rose to 18%. Chinese buyers remain the most active (over one-third of all deals), followed by purchasers from Myanmar, Russia, and Taiwan.

Supply and new projects

Construction activity markedly declined in 2025. In the capital region, 26.3k completions were registered in the first five months—34.6% less than in the same period of 2024. The drop affected both low-rise and multi-family stock.

A similar trend is visible at the permitting stage: in Q1 2025, 46.9k building permits were issued nationwide (–31%). The steepest fall was in Bangkok, where permits nearly halved. Developers are sticking to a cautious strategy, postponing new launches and focusing on clearing existing inventory.

Mortgage market

Monetary policy has been gradually eased. Since October 2024, the Bank of Thailand cut the policy rate by 100 bps, reaching 1.5% in August 2025. Major commercial banks followed by trimming minimum retail rates to 6.65–7.05%, and state lenders to 6.2–6.3%.

Despite lower borrowing costs, new mortgage issuance keeps shrinking: in Q1 2025, new housing loans fell 10%. Banks are tightening underwriting due to rising NPLs and weaker household solvency.

To revive activity, the government allowed LTV up to 100% for housing loans and introduced symbolic registration fees. Experts believe these steps could support low-rise demand, while the impact on the condominium market may be limited.

Rental market

Thailand’s rental segment is strengthening on the back of several factors: more young professionals delaying home purchases, an influx of expats, and steady tourism demand. According to DDproperty, interest in condo rentals grew 12% nationwide and 10% in Bangkok in 2024.

The hottest activity is in the capital—home to roughly 103k foreigners—and in tourist hubs such as Phuket, Pattaya, Samui, and Chiang Mai, where short-term demand remains strong.

Experts at Global Property Guide estimate the average gross rental yield in Q3 2025 at 6.20%. The highest yield was in Samut Prakan — 8.30%. Nonthaburi also exceeded average (6.45%), while Bangkok posted 6.04%. In Chonburi (Eastern Seaboard) investors can expect about 5.33%, and Phuket delivered 4.86%.

The premium-apartment segment shows resilient growth: JLL reports +5.4% in average rents in Q1 2025, and CBRE records +4.1% in Q2.

Rents are rising fastest in prime Bangkok areas. Average monthly rates topped $19/sq m in Central Lumphini and Siam, reached almost $18/sq m in Sukhumvit, and about $15/sq m in Silom and Sathon. As a result, leasing is becoming an ever more prominent market pillar, helping offset sluggish purchase demand.

Macroeconomic backdrop

Thailand’s economy in 2025 is expanding more slowly than that of regional peers. GDP grew 2.5% in 2024; the Bank of Thailand now projects 2.3% for 2025, while the IMF expects an even more modest 1.8%. For 2026, forecasts are more cautious still—around 1.7%.

Inflation remains very low. In July 2025, CPI rose just 0.21% y/y, far below the 1–3% target band. The central bank forecasts 0.5% inflation in 2025 and 0.8% in 2026. After a strong 2022–2024 recovery, the tourism industry softened again: 16.7 million foreign visitors arrived in H1 2025 versus 17.5 million in 2024.

The main drag comes from a decline in arrivals from China and other Asian markets. Longer-haul trips from Europe and the Americas partially offset the drop. Hotel occupancy remains high—72.4% in H1—above both 2024 and pre-COVID levels.

Despite low unemployment (about 1%), structural issues persist: population aging, limited human-capital investment, and a large informal sector. Along with rising public debt and external risks, these factors prompted Moody’s in April 2025 to revise Thailand’s outlook from “stable” to “negative.”

Conclusion

In 2025, Thailand’s housing market shows moderate price growth alongside fewer transactions and restrained developer activity. For investors, the rental segment is most compelling: average gross yields above 6% compare well with regional peers and look resilient against weak purchase demand. That said, other locations can be more profitable (e.g., some markets post 8–9% on residential and even higher for branded hotels).

Thailand still has legal constraints for foreigners. Non-residents cannot own land, and condo purchases are subject to the 49% foreign-ownership cap per building (by total area). This significantly narrows options versus markets with freer ownership regimes.

Other risks remain: fewer new projects, tighter mortgage underwriting, rising NPLs, and softer tourism flows. High land costs and a tepid macro backdrop add pressure. In these conditions, investors need a highly selective approach to location and asset type.