Research recently published by Thailand’s Real Estate Information Center strongly suggests that the current condominium building craze in Bangkok and Pattaya is bracing for heavy Chinese investment once the pandemic ends. REIC executive director Dr Vichai Viratkapan said condominium sales have plummeted due to Covid-19 travel restrictions, but legal and immigration changes need to be made now for the future return.
REIC, which specializes in property valuation, research and seminars, says Chinese nationals own 52 percent of the one and a half million condominium apartments in Thailand that have been bought by foreigners. All other countries (eg Russia and UK) in the top ten list are within six percent. Presumably, the research is based on statements from numerous land registry offices across the country, although REIC’s website and Twitter account are silent on the methodology.
Research also reveals that 80 percent of condominium sales are made in Bangkok or Chonburi (which includes Pattaya). But the preponderance of Chinese buyers doesn’t mean buyers intend to live here. There is a growing affluent middle class in Chinese cities looking for a safe place to park their belongings, easily convertible, and away from the financial clutches of the Chinese Communist Party.
Dr Vichai commented, “It’s harder to sell condos to buyers who haven’t seen them in person because you usually buy when you fall in love with a property. Once the Thai government can vaccinate people here, it will be safe to resume international travel. He added that since most of the buyers are Chinese, the first factor is when the Chinese government allows its residents to travel abroad.
The REIC recommends that the government introduce changes to stimulate the real estate market in anticipation of the expected boom. He wants the foreign ownership limit in a condominium to be raised from 49% to around 75%. Not just any condominium in the countryside, but in popular areas where Pattaya (actually neo-Pattaya) is showcased alongside Chiang Mai, Phuket and the metropolis.
Sales of condos to foreigners are said to be limited to units worth at least 5 million baht in order to reserve the cheapest accommodation for less wealthy Thai buyers. REIC also wants foreigners to be able to buy new homes in selected areas – directly from the developer – provided the property is worth at least 10 million baht. Other proposals, currently under consideration by the government, are 10-year visas for large investors, more freedom from work permit requirements and even the possibility of permanent residence (i.e. no visa required).
Retired local real estate agent John Shackleton said: “Once the virus is gone, there will be an influx of Chinese ‘new rich’ willing to invest in real estate here. Don’t get me wrong, they have the money. This is the purpose of the ongoing condominium construction in Pattaya and Jomtien. It is a mistake to think that Chinese interest in Pattaya is limited to groups of tourists on zero-sum vacations who go to the floating market and do duty free.
Of course, whether all of this will happen is a moot point. Covid-19 will alter future travel in ways we cannot fully predict. Mass tourism may be a thing of the past. If so, investing in real estate might not be such a good idea after all: prices will drop! Even if 10-year visas for the rich are introduced, there is no guarantee in the market. An earlier attempt to attract the well-heeled, the Elite card, had a bumpy ride to say the least.
Donald Trump in Art of the Deal wrote: “I have read hundreds of books about China over the decades, made a lot of money with them, and I understand the Chinese spirit. We could always ask him.