Luxury Homes Market Stalls as Consumer Confidence Declines, Developers Eye Phuket and Hotel Ventures
Amid economic uncertainties, developers are refocusing efforts on Phuket's growing demand, particularly from international buyers, to sustain business growth
- Thailand's luxury homes market is stalling as economic uncertainty and declining consumer confidence lead potential buyers to save rather than invest.
- Stricter lending conditions and a higher rate of loan rejections are further hindering sales in the high-end property sector.
- In response, developers are pivoting their strategies to focus on markets with strong international demand, specifically targeting Phuket for new residential projects.
- To diversify revenue, companies like Assetwise are also expanding into the hospitality industry by developing new hotels, such as the "VOCO Phuket Bangtao."
Thailand’s real estate sector is feeling the weight of ongoing economic uncertainties, with demand for high-end properties, including homes and luxury condominiums, slowing significantly.
Developers are pivoting to more sustainable options, turning their focus to Phuket's thriving international market and expanding into the hospitality sector.
The sluggishness in the luxury housing market has become more apparent in the past year.
According to Knight Frank Thailand’s market analysis, demand for high-end single homes priced between 10-40 million baht, which previously dominated the market, has dropped, with sales volumes expected to remain flat or grow cautiously in the next year.
The market for properties over 20 million baht, a traditionally high-demand segment, has also been impacted by tightening credit conditions and increased loan rejections.
Nattapong Kunakornwong, CEO of SC Asset Corporation, explained that the traditionally strong demand from cash-rich buyers has weakened, as people are now opting to save rather than invest.
This shift in buyer behavior has led to a stagnation in sales despite efforts to stimulate the market with promotions and price adjustments.
"We are seeing a significant shift in consumer behavior," Nattapong said. "Buyers are more hesitant, relying more on loans. However, the stricter lending process is hindering sales."
Despite these challenges, international demand, particularly from buyers from China, Russia, and Myanmar, has helped maintain momentum in the luxury condominium market, especially in popular tourist destinations like Phuket.
Yet, local buyers remain cautious, particularly following recent natural disasters.
While 2025 may not see growth in the luxury property market, industry leaders like SC Asset and Assetwise are looking to survive the downturn by focusing on liquidity management and shifting toward markets with strong international demand.
Phuket, with its affluent international clientele, is seen as a prime location for future growth.
Kromchet Vipanpong, CEO of Assetwise, stated that while domestic buyers are hesitant, foreign investors, especially from emerging markets such as Israel, Russia, and India, continue to show strong interest in properties in Phuket.
Assetwise is also expanding into the hospitality market, with plans to open the "VOCO Phuket Bangtao" hotel, marking a move into recurring income businesses. This hotel is expected to open in late 2027 and is part of a broader strategy to invest in hospitality across the island.
Sansiri, another major developer, is also focusing on the Phuket market, with plans to launch 29 new projects over the next five years, valued at over 33 billion baht.
The developer is specifically targeting affluent buyers, including expatriates and international investors, to boost the demand for both residential and vacation properties in the region.
Poomchai Mattayompoppinyo, managing director of Sansiri’s southern project development group, remarked that the island is transforming into a global investment hub, catering to high-net-worth individuals seeking not only vacation homes but also long-term residency and business opportunities.
In the face of these challenges, Property Perfect is also adapting to the changing market. CEO Sanit Attayansakul explained that their focus will be on reducing debt and restructuring their business to ensure long-term financial stability.
Despite the overall market contraction, the company is continuing to invest in medium-range housing, which still shows strong demand.
As the luxury property market grapples with slower sales, developers are looking to strategic locations like Phuket and broadening their portfolios to include hospitality ventures to diversify income sources.
However, the year ahead presents a tough test for the real estate sector, where only the most adaptable developers may thrive in this shifting economic landscape.
