Chinese’s love affair with Thai Property

China’s growing tourists-turned-investors are breathing fresh life into the moribund property scene in Thailand since 2014.

p23Back in 2014, Thailand’s tourism industry was in the midst of a painful slowdown. The global economy was still fragile, the Russian Ruble had crashed and holiday makers were still worried about Thai political stability. This led the Tourism Authority of Thailand to initiate a charm offensive on the undervalued yet potentially massive market that is Mainland China.

Fast-forward 2 years later and Thailand is now the top holiday destination for China’s holiday makers (since 2015); last year alone a whopping 7.9 million Chinese visited Thailand. Visitor of Bangkok’s two international airports (Don Muang and Suvarnabhumi) are now greeted by announcements and signboards in 3 Languages notably English, Thai and Mandarin. Now if you hop on the BTS Skytrain or stroll through Bangkok’s landmarks such as The Grand Palace or Wat Pho, you will not miss the Chinese tourists present in ever greater numbers!

Screen Shot 2016-08-03 at 3.35.18 PMIn many ways Thailand’s 2014 tourism woes and general economic slowdown, were mirrored in the property market. While developers in Bangkok still benefitted from solid support from the local Thai buyers, expatriates and international buyers from the traditional markets such as the UK, United States and Europe were reduced to a trickle. This led home builders to either bolster their marketing activities locally or to start trying to shift their “wares” to foreign markets closer home notably Malaysia, Singapore, Taiwan, Hong Kong, etc. This strategy was extremely successful for international-centric developers such as Fragrant Group and Sansiri PCL; however to a large extent, China was overlooked and undervalued as a potential marketplace.

CHINESE TOURISTS TURNED INVESTORS
The situation has changed and this massive surge in Chinese travelers has had an inevitable positive domino effect on Thailand’s property industry. Tourism has raised Thailand’s profile as an attractive investment destination, a label that was usually reserved for established destinations such as Hong Kong and Singapore.

A few years back, Chinese property buyers in Thailand were often one-off purchases by businessmen with commercial interests in the Kingdom. However this has now shifted to mainstream Chinese buyers who are discovering Thailand and its opportunities through travel. These buyers’ motives are broad; from buy-to-let investors, speculators to people simply looking for second homes.

This trend is now starting to snowball with Juwai. com, a leading Chinese property portal catering to Mainlanders, estimating that Thailand is now a top residential investment destination. The portal states that Thailand’s current popularity is even comparable to more developed and matured property markets such as the US, UK and Australia.

The signs that China and its buyers, has potential to positively and massively impact the property market are already visible. Sansiri PCL, a traditionally international-centric developer has stated that its biggest groups of overseas customers are now reportedly Hong Kong and Chinese nationals. Numerous developers have joined in the fray and are now hosting roadshows/events and are even present at Chinese Property Expos in an attempt to charm buyers. Perhaps even more striking is the level of effort and resources that some local developers are investing in to tap into the opportunity that is China; some Thai homebuilders have even made a conscious effort to start employing Mandarin-speaking sales staff!

THAI-CHINESE DEVELOPERS JOINT-VENTURES
This is a two-way stream, with Chinese developers/investors also lining up to develop residential projects via joint-ventures with local Thai partners. An example of this trend is “TC Green Rama 9”, an ambitious residential development by Tiancheng International Property (Thailand) Co. consisting of 4 towers and a total of 1,900 units. The Project was marketed both to local Thai buyers and Chinese buyers. Even bigger established companies have welcomed this foray, with Charn Issara PLC, a listed Thai developer forming a joint venture with Junfa Real Estate Company Limited with the aim of developing a residential project worth 3 billion THB in Thailand’s South.

Screen Shot 2016-08-03 at 3.31.44 PMThe most interesting aspect of this surge in Chinese interests is perhaps its wide geographical spread. Thailand’s popularity as an investment opportunity is not only confined to its capital Bangkok, but instead is distributed with buyers looking as far and wide as Pattaya, Hua Hin, Chiang Mai, Phuket and even Koh Samui.

For regional marketplaces such as Pattaya which have been hard hit by the global economic slowdown, this sudden overseas interest is an invigorating burst of fresh air. Many property agencies and developers in these provinces have started to reframe their marketing activities in an attempt to capitalize on this growing opportunity. In many ways, this trickle that is now a stream, is reviving numerous local economies that required this jumpstart to get back on their feet.

While this massive trend is underway, few property professionals know when the interest of the Chinese will wane and many wonder whether this trend is sustainable. However, few doubt that this could potentially transform and reshape the local property landscape. At present, mainstream Chinese buyers’ forays into the Thai property market has been timid, restricting themselves to off-plan properties. Once they are acquainted with the business landscape, this could lead to a whole new level of investment which due to its sheer enormity, could generate lucrative opportunities whether you are a developer, investor or even a mere landlord!

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