Baht’s strength only mild deterrent, mainland buyers still hungry
Despite a rise of the baht’s value against the yuan and in the face of the US-China trade row, Chinese investors continue to buy Thai property, though at a lower rate than in 2018.
Carrie Law, chief executive and director of Chinese international property portal Juwai.com, said further growth of Chinese purchases of Thai properties is expected in 2019.
“This is a good year for developers to sell to the Chinese in the face of slower momentum from local buyers,” she said.
“What appeals to Chinese buyers is quality property at a good price. They want to buy a luxury property at a price that makes sense.”
Ms Law said Bangkok and Chiang Mai are the most popular locations for rental guarantees.
Most buyers expect a guarantee of 5-7% a year, depending on the project and the price range.
Chinese buyers love the concept of a rental guarantee. There is an increasing worry, however, that not all rental guarantees are reliable.
As important as the yield is to know the developer is above board and the guarantee can be trusted, she said.
Many Chinese bought off-plan properties in Thailand a few years ago. Some of these units are scheduled for completion this or next year.
Despite the drastically different exchange rate since 2017, Ms Law believes Chinese buyers will take possession of their purchases as expected.
“We saw a more acute potential problem in Australia last year when Australian banks refused to provide mortgages to Chinese buyers to whom they had promised loans, but the actual rate of failures to take possession was very low,” she said.
According to Juwai.com’s data on Chinese inquiries into buying property, Thailand was ranked the most popular country, followed by Japan.
Quang M Do, who is on the board of directors at property brokerage firm List Sotheby’s International Realty, said Japan, particularly Tokyo, appeals to Chinese property buyers as the country will host the 2020 Olympics in Tokyo.
“Infrastructure is improving in Tokyo. The most attractive market among Chinese property buyers is apartments for rent,” he said.
Prem Narula, associate director of Richmont’s International, the Bangkok affiliate of Christie’s International Real Estate, said Thai property’s appeal to Chinese buyers will continue to be robust despite unfavourable sentiment.
“Key drivers are friendly locals and tourism,” said Mr Prem. “Thailand will never lose its appeal.”
According to Juwai, Chinese buyers in the first quarter this year made more than four times more property buying inquiries in Thailand than a year earlier.
“The currency does have an impact but it’s less significant than in more expensive markets, where a 5% change means much more money,” said Ms Law.
She said 85% of Chinese buyer inquiries in Thailand are for properties priced at about 8 million baht or below.
Chinese buyers most often want a one-bedroom condo in Bangkok. Of all buying inquiries, 40% are for one-bedroom apartments, 24% for three-bedroom apartments, and 14% for two-bedroom apartments.
Chinese buyers are relatively conservative and the majority are still looking at traditional destinations — Bangkok, Pattaya and Chiang Mai are the most popular.
Koh Samui and Krabi are seeing increasing numbers of buyers. If the destination has a good air link to China, beautiful beaches and appealing new condo developments at the right price, then you should be able to get the interest of buyers from mainland China, Ms Law said.
Chinese love Krabi for affordable luxury and the gorgeous natural environment. They feel they can get real value in the area, she said. Many Chinese are familiar with Krabi, having travelled there as tourists.
“Juwai.com often hosts events in Hong Kong, Beijing, Shanghai and other Chinese cities, where we introduce buyers to Thai property. They love it. The price, the beauty and the potential returns are all deciding factors,” said Ms Law.
Proximity to China, accessible cultural and cookery traditions, and the probability of significant economic growth in the years to come are also factors for investors from the mainland, she said.
Medical care here is of high quality and inexpensive. Chinese youth can study at universities in Thailand for relatively low costs, after which they can go on to graduate programmes in Australia, the US or the UK, said Ms Law.
“The lifestyle in Thailand is very appealing. With growing numbers of Chinese choosing to retire in Thailand for at least part of the year, the most important thing is to understand what someone at that stage of their life needs,” she said.
Retirement and senior living is a fast-growing segment of the Chinese market simply because the population is ageing. The top four factors considered when Chinese retire overseas are affordability, medical care, family and lifestyle.
They find real estate and daily expenses to be more affordable, and they can access more advanced healthcare, said Ms Law. They can be near children and grandchildren if they already live in Thailand. And they can enjoy Thailand’s weather, environmental quality and lifestyle, she said.
“Bangkok and Chiang Mai are the most popular cities for Chinese retirees,” said Juwai’s executive chairman Georg Chmiel.
The number of Chinese who may retire in Thailand in the coming years could be staggering. By 2030, there will be 340 million Chinese aged 60 or above. That’s more than five times the present population of Thailand. Most Chinese people begin planning and investing for retirement in their 40s and 50s.
“Thailand’s one-year renewable visa for retirees over 50 years of age makes it easy. You only need to have about US$25,000 [773,798 baht] in liquid assets,” he said.
Chinese buyers need ease of management, quality of life, appropriate design, a sense of community, access to good healthcare and an abundance of convenience. Building for retirees goes beyond just real estate.
Mr Chmiel suggested Thai developers make things easier for overseas buyers by offering property management and other post-transaction services.
“Can you help them rent out their unit, pay their taxes, comply with regulations and make sure their tenants are taking care of the property?” he said.
“If a buyer can make an investment that requires little ongoing work on their part, they are much more likely to purchase. They may even come back and buy more units from the same developer.”
Mr Chmiel said Chinese buyers tend to like luxurious fittings and amenities, even if they don’t intend to occupy the unit themselves. These are reassurance of a good investment that will hold value. Projects should be located near mass transit stations, close to shopping, offices, schools, parks and other recreational spaces.