Thailand’s housing market has been affected recently by a triple whammy of tightened regulations, a stronger baht that deterred foreign investors and an economic recession caused by the pandemic.
However, the property outlook is improving as Chinese investors, who form the bulk of overseas home buyers in the Southeast Asian country, are primed to re-enter the market. This could lead to a post-COVID-19 rebound in the sector.
There was no escaping the pandemic’s impact last year, which slowed the Thai economy and increased household debt. According to Thai property website DDProperty, this caused about 75 per cent of consumers to delay their home purchases.
The pandemic came on the heels of a tighter loan-to-value (LTV) measure issued by the Bank of Thailand in April 2019, which had already deterred home buyers from investing in multiple properties and stifled demand from mid-2019 to early 2020.
This slump continued till the start of 2021, with prices falling further as the COVID-19 outbreak dragged on. DDProperty’s quarterly Property Market Index showed the price index declining 2 per cent from the previous quarter.
The Supply Index has shown a similar downward trend, dipping by 6 per cent as developers delay launching new projects till demand picks up and focus instead on selling unsold stock.
Yet those hungry for savvy investments will be cheered by the low-interest-rate environment, especially when there are promotional campaigns to sweeten the deal.
Thailand Development Research Institute and property developers have urged the government to stimulate the property market – either by allowing foreign buyers to bid for residential units to plug the shortfall in domestic demand or applying additional stimulus measures.
This is good news for foreign buyers. In fact, the softening of Thailand’s property market is an ideal time for investors to act. The price index is at its lowest level since Q2 of 2018, so wealthy buyers can take advantage of lower prices in anticipation of an upwards trajectory.
Those relishing good investments could reap hearty returns if they pick the right property, price and location.
PropertyGuru’s Property Sentiment Index for the second half of 2020 showed that Bangkok remains a key focus for investors in Thailand.
Central locations in the country’s capital are always sought after by those working in the business districts. Ratchada, Ladprao and Rama 9 in Outer Bangkok are also appealing locations with more affordable prices and easy access to the train lines.
Most of these foreign property buyers are expected to come from China. They are drawn by an enviable quality and cost of living, beautiful tropical weather and a high return on investment.
The Chinese have long been enamoured with the Southeast Asia nation, which is famous for its beautiful beaches. The Land of Smiles has been the first- or second-most popular destination for Chinese tourists over the past two years, helped, no doubt, by its favourable visa policies and other measures such as expedited airport processing.
To add the icing on the cake, foreign property buyers receive free or discounted residency visas pegged to home purchases, which will give them easier access to the country.
An example is the Thailand Elite visa, which has worked with property development firms on a package that targets international buyers who purchase properties worth at least 10 million baht (S$420,000). Privileges include golfing memberships and exclusive spa access.
Thailand’s track record shows that it is a sound investment choice for Chinese property buyers. China Daily placed Bangkok as one of the top 10 overseas investment destinations for high-net-worth Chinese in 2020, with buyers recording an average of 18.4 per cent return on investments.
Winston Lee, PropertyGuru’s Director of Special Projects, believes that investing in Thai property will pay off for developers and buyers. “In the last few years, Thailand has surpassed the US as a top property investment and travel destination for mainland Chinese. Property transactions remained robust throughout the travel lockdown period via online channels,” he said.
“When borders are fully reopened, Thailand is expected to experience a pent-up demand in the real estate market from Chinese investors. DDProperty will be here to assist local developers to reach out to the right Chinese investors with a comprehensive and integrated marketing solution.”