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Hong Kong investors to stay a force in Thai property market

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IN THE PAST DECADE, Thai properties marketed overseas were either projects in prime downtown Bangkok or properties in top resort destinations such as Phuket.

Nowadays, visitors and investors are becoming more familiar with other non-prime locations in Bangkok through information from social media and digital communications.

New condominium property prices in downtown Bangkok have increased to an average of over Bt260,000 per square metre, with starting prices of over Bt10 million. The high Central Business District (CBD) prices combined with marketing efforts of non-prime locations by Thai developers, over the last two years, has increased awareness and interest from overseas investors in non-CBD Bangkok locations who are keen to invest in the fringe of the downtown areas or in midtown locations, especially along the extended mass transit lines where prices are more affordable than downtown areas.

The popular prices for these locations range between Bt3 to 10 million per unit.

Even though Chinese buyers are one of the fastest-growing groups of overseas buyers for real estate, CBRE believes that Hong Kong investors remain the most active in Thai property market. Chinese buyers have been constrained by increasingly strict capital controls and Chinese government policies aimed at restricting purchases of overseas property by their nationals.

A new Chinese regulation requires that banks report any transfer over US$29,000 and prohibits people from “lending” their quotas to other individuals, making it more challenging for a person to transfer money over their allowed annual quota. Additionally, the Chinese government has also banned transferring funds overseas for purchasing bonds, “insurance” products, and real estate; which has made it more difficult for mainland Chinese buyers to invest foreign property markets.

CBRE pioneered marketing of Thai properties overseas in the 1990s such as Laguna Phuket and SV City to purchasers in Hong Kong and Singapore. During the 2010s, Hong Kong investors focused on Phuket properties and super luxury and branded properties in Bangkok such as 185 Rajadamri, and Four Seasons Private Residences Bangkok.

In 2015, the mid to lower end condominium market slowed down resulting in Thai developers looking to overseas buyers.

THE LINE Jatujak-Mochit was the first notable non-CBD Bangkok project to be marketed in Hong Kong. More projects have since been |exhibited in Hong Kong during 2015-2017.

According to our counterparts at CBRE Hong Kong, Hong Kong buyers’ investments in the overseas property market totalled $6.6 billion in the first half of 2017 alone. Investment locations included the UK and Australia in the early stages, Japan started 2-3 years ago and Thailand in recent years. The total transaction value of Thai properties is expected to reach HK$3 billion (approximately Bt12.3 billion) in 2018.

Records indicate that approximately 85 projects by 35 developers from Thailand were marketed to Hong Kong buyers last year. Ananda Development and Sansiri were among the most active in marketing to Hong Kong and most major condominium developers were active in marketing at least 2-4 projects.

The influx of foreign developments, especially off-plan, into Hong Kong, has been so significant that the Hong Kong Estate Agents Authority will issue new regulations set to take effect in April of 2018 to govern agents selling properties located outside of Hong Kong to regulate agents and protect buyers.

This year, developers are bullish about the prospects for the real estate industry in Thailand and are planning many new launches as well and new phases in current projects.

This increase in supply will mean that developers will be targeting foreign purchasers for projects in good locations with high yield potential. CBRE expects Hong Kong to remain a strong investment buyer market for Thai properties in 2018 for both the luxury and mid-market segments.

Note: By Aliwassa Pathnadabutr, Managing Director of CBRE Thailand




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