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, mostly only “moderately wealthy” and put off by skyrocketing values in the mainland, are scouring the kingdom for residential properties. Buyers from China now 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.
However, 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.”
Thailand is now the fifth most popular destination for real estate investment by the Chinese, FTCR pointed out. In 2010, almost no Chinese were buying homes in Thailand.
That year, Chinese tourist arrivals in the country topped 1.22 million, according to the Thai Immigration Bureau.
Despite signs that the Chinese government’s capital controls could remain in place indefinitely, a third of FTCR’s respondents still reported an intention to purchase another Thai property within two years. 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 respondent 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.