Chinese Buyers Fight Thailand Real Estate Record: Housing Endowment, Holiday Oversupply, Bangkok Property Market Or Now Turning Point

Contributing author Julia Hongkong Report

Sunny beach, simple folk customs, comfortable life, these are the main factors that attract Chen Fang (a pseudonym) to buy a house in Bangkok.

"The housing price in Beijing is too expensive. 700 thousand yuan does not even buy a toilet in the center of the city, but in Bangkok, you can buy an apartment with fine decoration and bags, and all the supporting facilities around it are quite complete and the cost of living is very low." Chen Fang, who has entered retirement age, admitted to our reporter.

Two years ago, she often returned to Bangkok for work reasons and was attracted by the local living environment. She decided to buy a flat with a usable area of 27 square meters in the center of Bangkok for 700 thousand yuan. "This apartment is hosted by the Property Management Company. The rent is about 15 thousand baht (about 3000 yuan) per month, and I will spend time with my family on vacation."

At that time, Chen Fang's decision was very bold in many people's eyes. "When I bought it, people in Beijing did not go to the local house to see the house. I just saw that the real estate brokers felt satisfied with the photos sent out in the circle of friends. Ten days later, I flew to Bangkok to sign the contract and complete the transaction.

The longer she stayed in Bangkok, the more she fell in love with the city. Last year, she invested two apartments in Bangkok in one year, with a practical area of 39 square meters, located at the CBD center of Bangkok, which sells for 6 million 500 thousand baht. Another 30 square meter apartment adjacent to On Nut air station is priced at 5 million baht, "the plan is two sets of rental, and a larger area can be occupied with family members, such as Beijing's freezing cold and bad air in winter, which can come for some time."

According to the law of the Thailand, foreigners aged 50 or above can apply for a long stay residence visa in Thailand. High quality medical services and affordable prices have also strengthened Chen Fang's determination to provide for the aged in Thailand. She recalled that her husband had been dizzy to the local high end private hospital last winter. After a detailed inspection, she received only 200 yuan.

The net rent return is as high as 8%.

"At present, the net rental rate of residential rental in central Bangkok is about 4%, and some potential areas can reach about 8%. Usually Chinese buyers will trust the property to the property company, and sign a 12 month lease to pay 1 months' rent to the property company. " Southeast Asia's largest real estate brokerage network IQI Thailand broker Guo Haojie told reporters.

At the same time, she pointed out that, taking Bangkok as an example, because of the private ownership of land, Bangkok's housing price has maintained 5%-10% growth every year in recent 10 years. "Moreover, Thailand's property is a permanent property right. The local property market is still in its infancy and there are not many restrictions on foreign buyers. At present, some Chinese buyers who buy houses in Bangkok are expatriates of high-tech companies such as Alibaba and Jingdong, while others are doing some export business in China, including latex mattresses and so on.

In the second quarter of 2019, the volume of enquiries by Chinese buyers on Thailand's residential sector still surged by 74.2% over the same period last year. Thailand has surpassed Japan, Australia and the United States, becoming the most popular destination for Chinese buyers. Among them, the capital Bangkok is most favored by Chinese buyers, followed by popular resorts such as Chiang Mai and Pattaya.

"Compared to investors in hot investment areas such as the US and Australia, the driving factors of Chinese buyers interested in Thailand property and high demand for housing are not new, mainly from education, health care, lifestyle, price, entertainment, investment and so on." Georg Chmiel, executive director of the board of directors of the external network, said.

According to statistics from the home network, the proportion of houses purchased in Thailand to achieve investment targets is 21% higher than that in other countries, and the proportion of "second residential" or "holiday housing" is 148% higher than that of other countries, while the proportion of "retirement pension" is 189% higher than that of other countries.

For Chinese buyers, a reasonable price is also an important factor in their interest in Thailand real estate. According to the external network data, in 2018, the median price of Chinese buyers consulting property around the world was 308 thousand US dollars (about 9 million 500 thousand baht), and most buyers were concerned about the property price of around 250 thousand US dollars (about 7 million 700 thousand baht). Therefore, Thailand is very suitable for Chinese buyers who are very sensitive to the total housing price. The average price of new houses that Thailand has not yet sold is only 90146 US dollars.

According to Guo Haojie, at present, more than 90% of the Chinese people who buy houses in Thailand are buying small apartments with open or one room. The total price is about 600 thousand -120 yuan. "Some apartments close to the subway station and the surrounding facilities are convenient, and the basic occupancy rate is more than 85%, which is easier to rent."

After 90 buyers look for holiday homes

In fact, before 2010, there was hardly any figure of Chinese buyers in Thailand. In recent years, the number of local buyers in China has been almost "explosive" growth.

"Before, the main buyers of Thailand's real estate came from Japan, Korea and Russia. Thailand has opened its doors to Chinese tourists since 2013, and many Chinese tourists began to take a deep tour in Thailand, to learn more about local life and to interact with local people, resulting in the idea of buying houses locally. Many Russian buyers then sold some houses at pattier, and the first wave of Chinese buyers poured in. She said.

Guo Haojie moved to Bangkok in 2007, developed his own business there and moved his family to Thailand. In her view, most of the local residents in Thailand believe in Buddhism and are tolerant and open to foreigners. "They believe that the rich are the good news of their past lives, and there is no such thing as" hatred of the rich ". And for the vast majority of the local population, they have no difficulty in setting up their business as long as they work hard.

After his trip to Thailand last year, Xiao Qi (a pseudonym) was determined to buy a holiday home in the local area. "I want a place where I can get up in the morning and exercise, and I can swim in the evening and have a quiet atmosphere. Bangkok's housing prices are reasonable, and there's still room for rent. "

After spending 3 months, Xiao Qi finally selected a 30 square meter second-hand housing apartment near the Phrom Phong station along the BTS, with a total price of 1 million 200 thousand baht. Although the small apartment is small in size, it does not lose five star hotels, swimming pool, gymnasium, public reading room and sauna room.

From the choice of rooms to the inspection of the surrounding environment, plus the trial, to the subsequent booking and signing, she flew four times before and after Thailand. Xiao Qi finally passed the ideal "not to run for the sake of the house". "Now I fly in the past for a short vacation. When I do not live, I give the house to the local intermediary for short rent. In addition to life is very convenient here, there are also rich food, frugal by the people.

Data show that in the past 12 months, the Thai baht exchange rate rose to 9.9% against the renminbi, but the exchange rate growth did not seem to reduce the enthusiasm of Chinese buyers because of the cushion effect of falling prices.

Institutional early warning of Bangkok property market cooling

As an international metropolis, there are more than 3 million expatriates in Bangkok's 11 million long lived population. The low cost of living has led many expatriates to Bangkok. According to the 2019 global life report released by CB Richard Ellis in April, the price of buying a cup of coffee in Bangkok is only 2.41 dollars, and two people in a middle class restaurant can only afford 26 dollars. The price of high-end housing is about 455 thousand dollars, and the annual house price increase in the past 10 years is 3.2%.

Guo Haojie said that the current proportion of foreign buyers in the Bangkok property market is about 30%. Data show that the number of overseas expatriates in Bangkok has exceeded 90 thousand mark for the first time this year, an increase of 2.8% over the same period last year. Among them, the number of Japanese expatriates reached 34 thousand, accounting for about 19%, ranking the first place; the number of Chinese expatriates reached 27 thousand. These expatriates' favorite living areas are Sukhumvit.

Due to the increasing supply of apartments in recent years, a number of different agencies have issued a warning that Bangkok property market will have a certain degree of cooling. According to statistics from Knight Frank, the supply of new apartments in Bangkok hit a new high of 10 years in 2018, a total of about 65000 units, an increase of 11% over 2017. In the ten years from 2009 to 2018, the total supply of Bangkok Residence has reached about 500 thousand units.

CBRE predicted that in the second quarter of this year, 33 thousand and 500 apartments were being built in Bangkok, an increase of 10%, an increase of 10.3% over the same period last year.

The agency said that Bangkok's real estate market will slow down due to the increasing supply. Despite the rising land prices in central Bangkok and the scarcity of land for permanent ownership in prime locations, the competition for land is still fierce. But because of the government's new deal in the property market and the start of the new Bangkok city plan in 2020, many real estate developers have to re evaluate the situation and sales activities have slowed down significantly.

According to the report of CB Richard Ellis, in the second quarter of this year, the price of some high-end apartment buildings under construction in downtown Bangkok has been lowered to 267 thousand baht per square meter, down 2.3% from the same period last year, and some developers even lowered the sale price of completed buildings. However, because of the strong land prices, the overall housing prices in the downtown area of Bangkok will remain stable.

Developers cut prices

Since April this year, the government of Thailand has further tightened mortgage loans. If the first suite is priced at more than 10 million baht, or the housing value exceeds 10 million baht, the mortgage limit will be reduced from 80% to 80% in the previous 90%; the highest in the 2 suite is only 80%; and the maximum loan limit for two or more buyers is only 70%. Meanwhile, the Bank of Thailand raised the lending rate from 1.5% to 1.75%. This will undoubtedly curb local buyers and some investment needs.

Guo Haojie pointed out that, because of the new deal of Thailand government raising mortgage interest rate and the down payment number this year, the volume of real estate transactions of Thailand local buyers increased significantly in the fourth quarter of 2018 and the first quarter of 2019 before the formal implementation of the new deal. Especially in the fourth quarter of 2018, the volume of transactions was the highest in the whole year, and only 56 thousand units were sold in the greater Bangkok area, and the turnover increased by nearly 40%. In the first half of this year, the strategy of large developers in Thailand was mainly to stock up, while postponing the opening of new projects.

"The second, third quarter of this year, local purchasing power temporarily depressed. This means that this is the buyer's market, with full bargaining power, and developers are willing to give preferential treatment to clear goods, which is a good time for overseas buyers to enter the market. The Thailand government adjusts the land price every 4 years, and the new land tax law will take effect from January 1, 2020. It will levy vacant tax on the land not developed or utilized, so it is estimated that all Thailand land prices will rise by 10%-15% in the same period in 2020. The price of land in the capital Bangkok, especially along the MRT, will increase linearly. She said.

In mid 8 of this year, Pruksa Holding, the largest listed real estate developer in Thailand, said that since the launch of a series of new policies by the Thailand government in April 1st, the Thailand property market has shown signs of slowing down. Therefore, the company announced that the new projects introduced this year will be reduced from 55 to 40.

According to the statistics of Pruksa Holding, in the first three quarters of this year, the volume of property transactions in the greater Bangkok area dropped by 22% to 300 billion baht compared with the same period last year. The overall size of the apartment market dropped 28% to 160 billion baht compared with the same period last year, and the volume of transactions decreased by 22% to 42 thousand and 500.

"Restricted by loans and slowing down of economic growth and other negative factors, this year's major real estate companies have some performance retrogression. Our company originally planned to launch three new apartment projects this year, all postponed until next year." Guo Haojie said frankly.