Recent floods in Chiang Rai have led to a steep rise in labor costs, posing new challenges for the local economy. This natural disaster has devastated infrastructure and triggered a chain reaction affecting the labor market, businesses, and communities.
Mr. Shina Suttathanachot, President of the Chiang Rai Real Estate Association, revealed that after the flood subsided, new home builders found it difficult to find labor as many homeowners and businesses have been offering better wages to repair the damages from the floods.
He said construction material prices remained stable, and some retailers have even reduced prices to help those affected by the disaster, but finding labor is becoming more difficult.
Construction businesses in Chiang Rai are facing setbacks because the cost of hiring workers has surged, squeezing tight profit margins. This rise in operational costs, damaged properties, and supply chain interruptions have forced some businesses to scale back or temporarily shut down.
Labor is becoming increasingly harder to find, with wages increasing by about 10% from 300-350 baht per day to 400 baht per day for unskilled labor, while wages for skilled labor have already exceeded 500-600 baht per day.
Although the flooding in Chiang Rai Province has eased, the real estate market in the area continues to slow down due to the economic situation, he said.
The main problem slowing the real estate market is the loan rejection rate, which is as high as 70-80%, especially in houses priced below 3 million baht. In addition, the lack of confidence in the economy has made homebuyers not want to take on long-term debt, resulting in a decrease in purchasing power of about 20-30% compared to 2023.
This situation has affected real estate entrepreneurs at all levels, including large, medium and small. Large entrepreneurs have longer cash flows, allowing them to cope better than small entrepreneurs with much remaining stock. Mr. Shina said that Small entrepreneurs with a lot of remaining stock will have problems selling due to the still-weak economy, reduced demand and the ongoing flooding problem.
To cope with this situation, sales projects, especially projects with few remaining units, have discounted prices for closed sales. In addition, land in heavily flooded areas, such as the Kok River basin, may have to reduce their selling prices to make buying and selling easier.
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