by Daryl Lum | Mar 14, 2019 | News
We get this question once in a while. There is word going around about Thailand 4.0 and here is a brief explanation of what this is.
The Thai government has been progressively improving and progressing the Thai economy. Like all economic plans, these are conceptual ideas and a general direction of where the government would like the economy to be headed.
Thailand 1.0: Agriculture
Thailand 2.0: Light Industry
Thailand 3.0: Heavy Industry
The Thai government is aware of the economic challenges that have resulted from past economic models which have driven Thailand forward to date. If Thailand were to continue with previous economic models focusing on agriculture, light and heavy industries, they will not be able to overcome challenges like “a middle-income trap”, “an inequality trap” and “an imbalanced trap”.
Thailand 4.0: Innovative and Value-based Industry. High Income Country.
Four objectives of Thailand 4.0:
- Economic Prosperity:
– To create a value-based economy which is driven by innovation, technology and creativity.
– To increase research and development expenditure to 4% of GDP.
– To increase GDP growth to 5-6% within 5 years.
– To increase income per capita GDP from USD$5,470 (2014) to USD$15,000 by 2032.
- Social Well-being:
– To create an inclusive society.
– To reduce social disparity from 0.465 (2013) to 0.36 by 2032.
– To develop at least 20,000 households into “Smart Farmers” within 5 years.
- Raising Human Values:
– Raise Thailand’s Human Development Index (HDI) from 0.722 to 0.8 or within the top 50 countries within 10 years.
– Ensure that at least 5 Thai universities are ranked among the world’s top 100 higher education institution within 20 years.
- Environmental Protection:
– To become a livable and low carbon society.
– To develop at least 10 cities into the world’s most livable cities and reduce terrorism risk.
As mentioned before. These are general guidelines. It is important to note that it will require a lot of political clout from the government at that point in time to enforce such policies. It is, however, good to note that these are the general policies moving forward for Thailand.
Yours sincerely,
The Invest Bangkok Property editorial team
by Daryl Lum | Mar 3, 2019 | News
When investing in overseas properties, the fluctuations in foreign exchange come to play. For the past few years, the Thai Baht has been on an upward trend against most major currencies. Recently, the Thai Baht hit a post-coup high against the US Dollar. Here are some reasons for this.
To understand the flow of money, we have to understand how interest rates work. High-interest rates incentivise savers and discourage borrowing. Interest rates for savings and borrowers more in tandem. There cannot be a situation whereby one rate was set for savers and another for borrowers. The central bank sets the key interest rate and the banks base their rates off that key interest rate.
In December 2018, the Thai central bank raised the key interest rate for the first time in seven years. This is in contrast to the US where the Federal Reserve has been signalling that it will adopt a slower pace of normalising interest rates. This caused money to flow into Thailand as money would earn a higher rate of return if it were placed in Thailand as Baht rather than in the US as the US Dollar. One of the main reasons why the Thai central bank has to raise interest rates is due to the strong economic growth in Thailand. GDP growth has been robust for the past two years, clocking in at just around 4 per cent per annum (Source: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=TH and https://www.bangkokpost.com/business/news/1612202/world-bank-trims-thailand-2019-gdp-growth-to-3-8-) and unemployment has been very low less than 1 per cent (Source: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2129rank.html). As the economy becomes stronger, the residents get wealthier and they take on more debt as they invest in assets like real estate or take on loans to start a business. In fact, the local resident demand for Thai real estate has been so strong that the Thai government has had to step in and place loan curbs on the locals when purchasing property.
Moving forward, an overly strong Thai baht is not good for Thai exports as they will become more expensive to purchase. It may cause Thailand to be seen as a less affordable tourist destination and thus see fewer travellers. My take on this would be that as Thailand progresses, it will invariably be faced with such a dilemma. As its people get wealthier, it will have to cope with a stronger baht. London is the second most travelled city in the world behind Bangkok and the UK Pound is not exactly cheap when compared to the region. In fact, when the pound was strong, London was still one of the most visited cities in the world. Thailand is faced with, in my opinion, a good problem. A growing middle class, interest from foreign investors like the Chinese, it is located in the centre of South East Asia and earmarked to be a transportation hub. All these factors, barring any major shock to the system, will contribute to Thailand’s growth.
I wrote an article narrating about the strength of the Thai baht previously. You can find my article here: My views on the Singapore and Bangkok property markets.
This article is in response to this article: Thai baht soars to post-coup high, threatening local business.
Yours Sincerely,
Daryl Lum
On behalf of InvestBangkokProperty.com
by Daryl Lum | Mar 1, 2019 | News
According to a report by Bangkok Post, London-based residential design studio Yoo is opening an office in Bangkok. Yoo has 80 projects in 34 countries and one of the projects which we are familiar with is Khun by Yoo in Thonglor, Bangkok. Khun by Yoo is a freehold condominium in the heart of the upmarket Thonglor district and is developed by Sansiri. It is the highest price per square meter in Thonglor.
Yoo’s Bangkok office will complement its current one in Hong Kong. The Bangkok office will focus more heavily on projects in Southeast Asia. What Yoo does is that it partners with celebrity designers and work with developers to create a brand residence for property buyers. These developments are usually more premium due to higher end materials being used as well as due to their unique designs.
Yoo plans to open a hotel in Phuket called Yoo2 by 2020. According to Savills, Yoo has the largest market share in non-hotel branded residences and has the largest number of branded projects, even more than Marriot’s Ritz-Carlton and Four Seasons. Yoo holds 13 per cent of the total branded-residence projects worldwide.
The company is also currently working on projects in Kuala Lumpur, Malaysia and Hong Kong.
Yours Sincerely,
The Invest Bangkok Property editorial team
by Daryl Lum | Feb 19, 2019 | News
In the latest post by Bangkok Post, foreign investors are confident about Thailand’s economic prospects.
Reasons for the positive sentiment:
- The acceleration of planned megaprojects
- The participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
- Hopeful that Thailand will rev up negotiations for new FTAs after the elections especially with the European Union
- Positive sentiment from the Eastern Economic Corridor (EEC)
Areas which can be improved
- Connectivity between the EEC and related infrastructure developments
- Anti-corruption policies (implementation of e-government will help reduce corruption)
Concerns
- The strong Baht
- Escalating trade wars
- Brexit
Last year applications to the Board of Investments for foreign direct investment (FDI) from Japanese investors totalled 334 projects or 32 per cent of total FDI.
The Thai Chamber of Commerce (TCC) forecasts GDP growth to be in the range of 4 to 4.3 per cent, up from 4.1 per cent last year. The main drivers will be exports, government spending and tourism.
Source:
https://www.bangkokpost.com/business/news/1631230/foreign-investors-upbeat-over-thailands-prospects
Yours Sincerely,
Daryl Lum
On behalf of InvestBangkokProperty.com
by Daryl Lum | Feb 2, 2019 | News
Something that we have constantly mentioned was the strength of the Thai Baht. Many of our clients have purchased properties in Bangkok and sold them off and enjoyed not only capital appreciation but the appreciation against their home currency extrapolated their gains. An example would be an Indonesian client who purchased a property in Bangkok for 13.15 million Baht about a decade ago and sold it at 13.85 million Baht recently. Recent transactions in the development were transacting for about 10 per cent more than what he sold off the property for but he wanted a quick sale and thus marked down the asking and sold it in two weeks. He might have made 5 per cent in terms of price appreciation in terms of Baht but Baht had appreciated about 40 per cent against the Indonesian Rupiah and thus he made more than 50 per cent gains when he converted the Baht back into Indonesian Rupiah.
This is something which we have often advocated when looking to invest overseas. The fundamentals of a country do play a significant role in whether the investment will turn out well. Thailand’s fundamentals are strong and in comparison with countries in the region, it sticks out as a safe haven together with Singapore.
Here are two Business Times articles which may be useful for potential investors of Bangkok properties:
Thai baht outperforms in emerging Asia amid favourable domestic, foreign factors
There’s no stopping Thailand’s baht
Here is an article which I wrote previously. In it, you can see the 10-year history of how the Thai Baht has appreciated. In fact, it is the best performing currency in South East Asia in the past decade.
My views on the Singapore and Bangkok property markets
I have always maintained that never has there been a period in history whereby you have 1.4 billion people getting wealthier by the day. China’s growth and influence in the region are staggering and the Chinese are taking over the Japanese as major investors in Bangkok. Even though the supply of properties is high, the demand from the Chinese is correspondingly high. Of course, there are potential risks to regional growth especially with the trade war and a slowing Chinese economy. These risks are not bestowed on Bangkok alone but to the whole world.
Even though we are positive about the Bangkok property market, we do see a lot of developers launching projects in rather obscure locations. For this reason, we encourage buyers to always look for prime locations and purchase from a reputable developer.
Yours Sincerely,
Daryl Lum
On behalf of InvestBangkokProperty.com
by Daryl Lum | Jan 31, 2019 | News
A recent report by Knight Frank Thailand stated that the condominium market in Bangkok in 2018 set a record for the most number of new project launches in the past decade. For 2018, there were about 65,000 units that were released to the market. This represented an 11 per cent increase from 2017 numbers. Most of these units, about 42,000 of them, were released in the 2nd half of 2018. Let us analyse these figures and understand them a little better to make better investment decisions.
1) The bulk of these new launches, in fact about 57 per cent of the 65,000 units, were for developments in the outskirts of Bangkok. These developments are located along the extensions of the Green and Blue train lines.
Our take: We have always advocated buying in prime Bangkok. Most of the supply is happening in the outskirts of Bangkok where land is freely available. As the metro lines are expanded gradually, many developments will market themselves as being close to a train station. Buyers have to be discerning enough to know the locations with rental and resale demand.
2) The proportion of new supply in the Central Business District (CBD) of Bangkok was about 18 per cent or about 11,700 units.
Our take: Land in the CBD is scarce. Prime projects next to train stations in the CBD will sell out fast. The LINE Sathorn, next to Surasak BTS, sold out in 3 weeks. The bulk of which were local Thai buyers.
3) The proportion of new supply in the areas around the CBD was about 33 per cent or about 21,450 units.
4) The locations which developers focused on were
- From Asok to Ekkamai
- Phahon Yothin (Mo Chit to Khu Khot)
- Rama 9 to Ratchadaphisek
- Lad Prao to Rakhamhaeng
- Charan Sanitwong to Phetkasem
Our take: We still stand by our recommended areas to invest in Bangkok.
The good locations for property investment in Bangkok.
Where are the up and coming property investment locations in Bangkok?
5) The take-up rate was about 55 per cent. Condominiums in the CBD had take-up rates of about 51 per cent and the surrounding areas had take-up rates of about 64 per cent.
Our take: These rates are the total rates for all developments. Those that are far away from train stations and from less reputable developers with less quality finishing tend to do poorly in terms of sales as compared to the larger developers.
6) New suburban condominiums enjoyed about 50 per cent sales rate. Popular locations are from Asok to On Nut, Udom Suk to Bearing, Rama 9 to Ratchadaphisek, Phahon Yothin and Thon Buri.
7) The average selling price for all new units in 2018 is THB150,641, down 6 per cent from the previous year. The average price in the CBD was THB250,000, down 8 per cent and the area around the CBD was down 7 per cent to 120,000 baht. The average price of newly launched suburban units increased 3 per cent from 2017 and is up 20 per cent from 2015.
Our take: As Bangkok city expands further outwards, we will see many “cheap” offerings. Many foreigners may find these developments very cheap compared to properties back home. This is especially true for buyers from cities like Hong Kong and Singapore. However, we still advocate understanding the location before making a purchase as some of these locations do not have good rental and resale markets.
Yours Sincerely,
The editorial team at InvestBangkokProperty.com
