Chonburi real estate shifts to townhouse rentals amid declining sales

Chonburi real estate shifts strategy: From unsold housing projects to townhouse rentals amid declining sales for 2 consecutive years

In recent years, the real estate market in Chonburi has been affected by several negative factors, particularly in the housing estate sector, where new sales have consistently declined since 2023-2024.

According to data from the Real Estate Information Center (REIC), new sales of housing estates in Chonburi in 2024 have decreased dramatically, with sales dropping between 10.3% to 51.7% from Q1 to Q4. This trend is similar to 2023, where sales were negative from 14.8% to 38.5%.

So, why has the real estate market in Chonburi experienced such a significant decline in new sales? The answer lies in the "shrinking purchasing power," which has led to financial institutions reducing the number of loans they approve.

As a result, potential homebuyers are unable to access credit, even for properties priced below 3 million baht. While foreign investment in industrial parks has increased, it hasn’t been enough to revive purchasing power, partly because many factories have automated production lines, leading to fewer labour opportunities.

Wattanaphol Pholchivin, president of the Chonburi Real Estate Association, stated that due to the current situation, real estate developers in Chonburi have shifted their focus from sales to rental properties.

A clear example is the housing project in the Amata Industrial City area, which had initially planned to sell 3,000 townhouses at 2 million baht per unit.

However, after witnessing a decline in sales, the developer decided to change strategy and offer the townhouses for rent instead, setting the rental price at approximately 4,500 baht per month. This change resulted in a positive response, with a 100% rental rate, and tenants moved in immediately after the strategy shift.

"This strategy has proven effective in addressing the housing market issues in Chonburi. However, the follow-up question is whether these rental townhouses can help tenants eventually become homeowners under a Rent-to-Own model, which would allow them to build their financial statements to apply for home loans. While this may not be a perfect solution that guarantees tenants will become homeowners, it offers a potential pathway," Wattanaphol said.

From Wattanaphol’s perspective, renting a townhouse at 4,500 baht per month for a property worth around 2 million baht is challenging. Paying this rental fee does not necessarily mean tenants will easily be able to pay 9,000-10,000 baht per month in mortgage payments in the future.

Therefore, using the rental payment statement to apply for a loan from a bank may result in the borrower receiving a loan amount lower than their needs. The homes they could qualify for might be priced no more than 990,000 baht and are often located far from major employment hubs, making them unsuitable for people seeking housing near their workplaces.

"The approval of a home loan depends partly on the financial statement and the ability to repay in the long term. It seems that Rent-to-Own might not be the best solution for everyone, but it is an option that the market will need to experiment with and adjust according to future conditions."

Therefore, the shift of real estate developers in Chonburi towards the “renting” strategy for townhouses could be a good option in a market where new home sales are slow.

However, it cannot be denied that the return of homebuyers' ability to obtain loans and adjustments in bank lending conditions will be crucial factors in helping the real estate market recover. Understanding the real needs of consumers in this era will be the key to ensuring a win-win situation for both developers and consumers.

(2025/04/09-00:00)