China Solutions

Why Thailand is so popular among foreign property investors

January 10, 2023

With its sandy beaches and bustling cities, Thailand presents the best of nature and urban living at an affordable price to would-be property investors. It is no wonder then that it has become an attractive prospect for foreign buyers in recent years.

While the pandemic has dampened demand, the Kingdom is still widely considered to be a choice property destination.

Growing appeal

Before the global COVID-19 outbreak, Thailand was the most popular destination for buyers from China looking for a property investment or second home overseas.

In fact, they formed the majority of property buyers in Thailand. Of the 13,000 condominium units sold to foreigners in 2019, 55 per cent were Chinese nationals, according to Thailand’s Real Estate Information Centre.

Even through the pandemic, the demand from Chinese buyers has remained strong. In December 2021, at the height of the Omicron wave, remote purchases by Chinese buyers propped up the battered property market. The South China Morning Post reported that the group formed two-thirds of the total sold to foreigners in the first half of 2021, with sales worth around US$350million.

As the pandemic eased in 2022, the market has rebounded. The Real Estate Information Centre revealed that Chinese ownership in particular is a bright spot. In the second quarter of 2022, the number of units purchased by the segment improved by almost 30 per cent year on year.

While some analysts predict that the market may take until 2024 to revert to pre-pandemic levels, the signs of recovery have been encouraging.

For example, local property developers have reported improved earnings in the second quarter of 2022 despite the slowing economy and rising construction costs, with growing demand for segments such as low-rise housing. SPALI was the most profitable company, reporting a net profit of 2.1 billion baht (US$60 million), a 20 percent increase from 1.73 billion baht in 2021.

Winston Lee, Director of Special Projects at PropertyGuru, believes this upward trend is here to stay.

“Thailand has seen a steady increase in property prices over the years,” he said. “Demand for property in the country remains strong from both Thais and overseas investors. Rental properties are in high demand from tourists and long-term residents, presenting more alluring returns on investments.”

Why Thailand?

There is just something about Thailand that intrigues the general Chinese market. Every day, there are 214 million Thailand-related search requests on Chinese super app WeChat, which has instant messaging, social media and payment functions.

Meanwhile, Chinese search engine Baidu reports an overwhelming interest in overseas properties not just from high-net-worth individuals but the growing middle class as well.

Developers can seize such opportunities by using platforms such as PropertyGuru’s China Solutions, which will help build and generate leads in the Chinese market.

One major reason that fuelled the demand during the pandemic was China’s zero-COVID policy, which resulted in strict lockdowns that immobilised many of its major cities.

“The worsening COVID-19 outbreak caused many in China to evaluate whether to live in China forever or migrate if they can,” said Lee. “This is why the pent-up demand for overseas properties was formed.”

While there may be important push factors, Thailand itself boasts plenty of pull factors.

First, the country has an affordable, reliable and high standard of healthcare. It has 60 medical sites and hospitals that are internationally accredited by the Joint Commission International, double that of Japan.

Second, international school fees are considerably lower than in China, where charges can cost four times more.

Such low-cost living and schooling allow middle-class Chinese to potentially live a “millionaire lifestyle” in the country.

Finally, the sheer variety of desirable locations in the Southeast Asian nation is another big draw, from cosmopolitan Bangkok to coastal Chonburi. The two provinces ranked the most popular among foreign buyers in the first six months of 2022.

The others on the top-five list are Samut Prakan, which neighbours Bangkok and lies at the mouth of the Chao Phraya River; Phuket, known for its idyllic beaches; and Chiang Mai, a mountainous region in the north.

This means there are options for everyone, from young families and retirees to digital nomads and those looking for weekend homes.

It is no surprise then that Thailand’s property market has drawn investors from around the world. After Chinese nationals, those from Russia, the United States, United Kingdom and Germany form the next biggest share of condo unit buyers in the country.

Investors are welcome

Recognising the demand, the Thai government recently proposed allowing wealthy foreigners to buy land in the country in return for investments. However, this was quickly retracted after the plan drew flak from critics, who accused the government of “selling off” the country.

Despite this hiccup, the signs point towards more investor-friendly initiatives to come, with the authorities keen to sustain foreign capital to the property sector.

Aided by a fast-recovering tourism sector, the Thai property market looks set to re-emerge as a prime destination for foreign property investors.

For more insights into the region, lookout for PropertyGuru’s Southeast Asia Property Investment Show (SEAPIS) 2023, where there will be ample lead opportunities and industry thought leaders will share on the latest trends.