Amata City Chon Buri Industrial Estate. Workers employed within the estate are keen on renting townhouses located in the vicinity.

Residential supply and demand in Chon Buri has shifted towards the rental market due to weakened purchasing power and high mortgage rejection rates among prospective local homebuyers, while foreign demand remains strong, according to property executives.

Vattanapol Pholchivin, president of the Chon Buri Real Estate Association, said some developers have adjusted their sales strategy, converting townhouse projects originally intended for sale into rental properties as many prospective buyers fail to secure mortgage loans.

"The developers are allowing customers to rent when they are unable to obtain financing," he said.

"Absorption rates for units priced at 3 million baht or less have nearly ground to a halt as many buyers struggle to qualify for home loans due to stricter lending policies implemented by banks in response to rising household debt."

Mr Vattanapol said these townhouse projects, totalling 3,000 units, are located near Amata City Chon Buri Industrial Estate, with prices of around 2 million baht per unit. The primary target market is workers employed within the industrial estate.

"Developers are offering rental rates of 4,500 baht per month, which has drawn considerable interest," he said. "The demand is so high that, in some cases, tenants are ready to move in before the paint has dried."

However, this rental rate does not help tenants build the financial record required to qualify for a home loan. To afford a townhouse priced at 2 million baht, buyers would need to meet the minimum repayment threshold of 9,000 baht per month.

In contrast, a monthly rent of 4,500 baht would only qualify tenants for a home loan to purchase a property priced at around 990,000 baht.

Unfortunately, properties at this price are typically located in more remote areas, which are less attractive to potential buyers in this market segment, said Mr Vattanapol, who is also managing director of Chon Buri-based developer Maneerin Property Co.

"Most local homebuyers in Chon Buri originally come from other provinces," he said. "They move to Chon Buri to study, stay on to work, and eventually settle down to have a family and purchase a home after working for some time."

He said the Chon Buri residential market, which saw a new high during the pandemic in 2020-2021 due to social distancing, has experienced a drop in demand due to weakened purchasing power and mortgage loan rejections among prospective local homebuyers.

According to the Real Estate Information Center (REIC), new low-rise housing sales in Chon Buri saw a decline for four consecutive quarters, dropping from 2,088 units in the fourth quarter of 2023 to 1,008 units in the fourth quarter of 2024.

Meanwhile, new condo sales rebounded in last year's fourth quarter to 1,928 units after falling from 2,791 units in the first quarter to 2,381 units and 1,448 units in the second and third quarters, respectively.

New sales of villas, which peaked at 37 units in the fourth quarter of 2023, fell slightly to 34 and 33 units in the first and second quarters of 2024 and rebounded to 43 units in the third quarter before falling to 24 units in the fourth quarter.

"The average price of villas sold in the fourth quarter of 2024 dropped to 26.4 million baht from 30.1 million baht in the fourth quarter of 2023, as foreign buyers shifted to lower-priced segments while Thais purchased for rental purposes," said Siddhipen Siddharthapong, assistant director-general at REIC.