Chinese are becoming investors first, tourists second in Thailand
Chinese are becoming investors first, tourists second in Thailand
That is, if Beijing’s capital controls don’t catch them first
Chinese demand for real estate in Thailand is at an apogee, but the Beijing government’s drive to control capital flight could hinder such demand, according to a new report by Financial Times Confidential Research (FTCR).
Surveying 108 investors, FTCR found that Chinese buyers, put off by skyrocketing values in the mainland, are scouring the kingdom for residential properties. More remarkably, these buyers are only “moderately wealthy.”
Thailand is the fifth most popular destination for real estate investment by the Chinese, FTCR reported. Chinese buyers account for 10 to 20 percent of total sales in the tourist hubs of Chiang Mai, Pattaya, and Phuket, and 5 percent of those in Bangkok.
In 2010, almost no Chinese were buying homes in Thailand, FTCR pointed out. That year, Chinese tourist arrivals in the country topped 1.22 million, according to the Thai Immigration Bureau.
Such foreign demand is likely to recede soon. “The immediate outlook for Chinese investment flows into Thailand is negative,” FTCR stated in its report.
“In this new climate, we expect investors to delay plans to purchase more Thai real estate, at least until the dust settles, if not until the Chinese government loosens up again.”
More: 5 reasons Thai construction is hot again
Still, a third of FTCR’s respondents reported an intention to purchase another Thai property within two years, despite signs that the Chinese government’s capital controls could remain in place indefinitely. Around 26.8 percent of respondents evinced a desire to buy in Phuket, the most for all Thai destinations, followed by Chiang Mai (19.5 percent).
The greatest concentration of recent purchases by the Chinese lies in Bangkok, with 29.3 percent of respondents currently owning a home in the Thai capital. Chiang Mai is next, with 21.8 percent of respondents reporting residential properties in the northern Thai city, followed by Phuket (17.3 percent) and Chonburi (15.8 percent).
Most of the respondents are considered mid-market buyers. Sixty-three percent spent CNY1 million (USD145,386) on their homes, while 22 percent paid CNY500,000.
One Shanghai-based resident opined that Thai real estate is more within his means, with reasonably high rental yields to boot, than comparable properties in China. “(Thailand) is just like China in the 1980s: everything is waiting for a great boom,” he told FT.
Read next: Why luxury real estate in Thailand remains a solid investment
Source: Property Report