Despite higher costs driven by rising energy prices as a result of the war in the Middle East, condo developers are continuing to launch new projects as planned this year because construction contracts for these projects were already secured with contractors.
Surachet Kongcheep, head of research at property consultancy Cushman & Wakefield Thailand, said developers are pressing ahead with new launches despite unfavourable market conditions on both the demand and cost fronts.
"New condo projects set for launch come from developers relatively confident in sales, focusing on select segments rather than broad-based launches as in the past," he said. "Marketing campaigns and sales incentives will be needed to stimulate demand this year."
Sales prices of new condo units may not rise significantly despite higher construction material costs because most projects carry earlier cost structures and developers are cautious about raising prices, fearing weak sales, noted Mr Surachet.
New condo supply in Bangkok this year is expected to fall short of 17,000 units, as the Iran war has dampened market sentiment. While sales were strong in the first two months, demand slowed in March following the escalation.
In the first quarter of 2026 the condo market slumped, with new launches dropping to 7,170 units compared with more than 20,000 units per quarter in the past.
Excluding a 4,000-unit launch by BTS Group's Baan Chao-Thai project, new supply would tally fewer than 3,000 units.
The condo market this year continues to face challenges from a slowing economy and geopolitical tensions, particularly the Gulf conflicts, which have driven up oil prices, Mr Surachet said.
Rising energy costs have fed through to higher prices for goods and services, while concerns over potential shortages have led Thai consumers to cut spending, weakening overall purchasing power.
The delayed formation of a new government in the first quarter has also weighed on consumer confidence, prompting many buyers to postpone big-ticket purchases, particularly housing.
NO EXCITING STIMULUS
Although government measures, including incentives for homes priced below 7 million baht and relaxed loan-to-value rules, have been introduced, they have yet to translate into a meaningful recovery in demand.
Developers have attempted to stimulate sales through various marketing strategies, but results have fallen short of expectations.
While early-year sentiment showed signs of improvement, with some projects attracting strong interest at launch, momentum weakened after the conflict intensified.
As a result, most developers are scaling back new launches, with total new condominium supply in 2026 projected at 15,000-18,000 units, depending on economic conditions and the trajectory of the conflict in the second half.
In the first quarter, developers shifted their focus towards more affordable segments, pushing the average selling price of new launches down to around 84,500 baht per square metre, a sharp drop of 55% from the previous quarter, as most projects were located in suburban areas with prices below 80,000 baht per sq m.
Price growth this year is expected to remain limited, while sales rates are likely to stay subdued in line with the economic slowdown and weaker domestic buyer confidence, said Mr Surachet.
FOREIGN DEMAND
"Foreign demand remains a bright spot, with signs of recovery from last year, particularly among buyers seeking overseas residences or capital diversification, with Thailand seen as an attractive destination," he said.
A long-stay visa scheme tied to condo purchases worth at least 3 million baht has also been introduced, targeting retirees, investors and digital nomads seeking extended stays in Thailand, particularly in key destinations such as Phuket, Chiang Mai, Pattaya and Bangkok.
However, its effectiveness in boosting foreign demand will depend on market conditions in the remainder of the year.
Rising inflation driven by oil prices is expected to have a limited impact on property prices, as construction materials account for only 25-30% of total project costs.
A 10-20% increase in material prices would raise overall costs by 2.5-6%, which developers can still manage, though margins may narrow slightly.
However, prolonged cost increases could eventually put upward pressure on prices. For now, developers are prioritising sales, particularly for completed units ready for transfer.
A key concern remains tightening mortgage approvals, with rejection rates exceeding 50-60% as financial institutions adopt stricter lending criteria, further constraining demand in the housing market.
