Thailand’s real estate market is set to endure a difficult year ahead, with projections indicating a substantial drop in industry revenue. Surachet Kongcheep, head of the forecasting division at Cushman & Wakefield Thailand, has warned that revenue in 2024 could fall by more than 15% compared to the previous year.
While some property developers like Sansiri (SIRI) are cautiously optimistic, forecasting a modest growth of 2%—equating to about 39.2 billion baht—the overall market remains in flux. The decline in real estate revenue is attributed to a combination of factors, including shifting government policies, weakening consumer purchasing power, and rising labour costs. These elements have been contributing to a general sense of uncertainty within the sector.
Data from the Office of Small and Medium Enterprises Promotion (OSMEP) paints a similarly bleak picture for small and medium-sized enterprises (SMEs). The latest SME Confidence Index (SMESI) has dropped from 53.9 to 53.1, signaling growing concern among smaller businesses about the economic outlook. One of the most pressing challenges for SMEs is the persistently high prices of goods and services, which continue to squeeze their operations.
In the real estate sector, companies like AP (Thailand) are projecting a revenue of 37.5 billion baht, while Supalai (SPALI) expects 32 billion baht in earnings. However, overall profitability is under strain, with both SIRI and AP (Thailand) anticipating declines of 13.3% and 17.1%, respectively. Despite these challenges, some developers are adjusting their strategies to meet shifting consumer preferences. For instance, SPALI remains focused on premium-grade projects, while SIRI plans to launch 29 new developments worth an estimated 52 billion baht. However, the broader market is struggling to keep pace with these changes.
SMEs, across a variety of sectors, are finding themselves under financial pressure as well. Government schemes, such as the 10,000-baht Digital Wallet initiative, are designed to stimulate spending, but their impact has been limited. Panita Chinawat, Deputy Director of OSMEP, highlighted that many small businesses have not fully leveraged the available support, leaving them vulnerable to ongoing economic volatility.
Industries such as agriculture and manufacturing have been particularly hard-hit. The manufacturing sector’s SMESI has fallen from 52.6 to 51.3, driven by escalating production costs and weak sales in key areas like plastics and metals. These challenges are compounded by bureaucratic inefficiencies that prevent SMEs from fully accessing financial assistance programs, including the Easy e-Receipt 2.0, which was meant to enhance financial accessibility.
In contrast, Thailand’s tourism sector has provided some respite, particularly in southern Thailand and Chiang Mai, where visitor numbers have helped stabilize the broader SME landscape. The continued strength of the tourism industry has provided a much-needed buffer for many businesses reliant on service-oriented revenue streams.
Looking ahead, there is cautious optimism among investors. The SME Confidence Index is expected to rise to 54.9 in the near future, spurred by major spending events like the Songkran festival. This seasonal demand boost, particularly in the hospitality sector, is expected to provide some support for small businesses.
As Thailand grapples with a challenging economic environment, the future of the real estate market will largely depend on effective government policies and financial support mechanisms. Should initiatives aimed at providing targeted assistance to both SMEs and real estate developers succeed, there could be an opportunity for a market recovery, particularly for leading players like Sansiri and AP (Thailand). Expanding access to funding and support will be crucial to revitalizing SMEs and ensuring long-term economic stability.
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