Covid-19 | Thailand Property Development Crisis

Real Estate Investments in Thailand, buying Vacation Homes, Thai Real Estate Agency Directory, Foreign Property Ownership in Thailand and off-plan Condominium Purchase.
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Joined: Thu Sep 03, 2020 8:18 pm

Thu Oct 01, 2020 4:33 pm

Expat shift drives changes in Bangkok’s Condo Market

Thailand’s dominant working expat nationality in past decades has been Japanese, currently making up 18% of expatriates in the country. But, while Japanese expatriate numbers are decreasing, a CBRE report notes that Chinese and Filipinos are on the rise. There were 28,560 Japanese expats in Thailand as of Q3 2020, just ahead of the Chinese expat contingent at 25,811.

As China’s manufacturing has shifted overseas and Filipino expatriates have increased in line with local demand for teachers fluent in English, there’s been a continuing de-centralisation of the expat communities living in Thailand. Rathawat Kuvijitrsuwan, Head of CBRE Research and Consulting, Thailand says thatJapanese expatriates primarily work in manufacturing, export/retail/automotive, real estate services including leasing, and business services sectors. “The decline in the Japanese expatriate population in Thailand is due to high industry maturity where locals can fulfil expatriate jobs competently, relatively high wages, and industrial relocation to neighbouring countries such as Vietnam and Cambodia.”

Rapid industrialisation in Thailand between the mid-1980s until the Asian Financial Crisis in 1997 saw a surge in the Japanese expatriate population culminating in Thailand as the fourth largest Japanese population outside Japan at its 2015 peak after USA, China and Australia. However, the population size has experienced a 22% decrease since then, the lowest amount since 2012.

Meanwhile, the amount of Filipino and Chinese expatriates, the two fastest growing nationalities, have increased by 38% (13,146 to 18,472) and 31% (from 18,812 to 25,811) over the past 5 years, according to the Foreign Workers Administration Office. Chinese nationals in Thailand work mainly in manufacturing as the country shifts its production outside China to avoid US tariffs on Chinese-made goods. Filipino nationals work mainly as teachers due to their native fluency in English and the relatively lower wages than their European, North American, Australian and New Zealand counterparts, making them a strong force behind international and bilingual schools in Bangkok.

CBRE Research reveals that extensions of downtown Bangkok such as Rama IX and Ratchadapisek have become Chinese expatriate hotspots due to amenities such as Chinese-centric restaurants, shops and convenient MRT access. Similarly, On Nut is a preferred area for Filipino expatriates due to lower rentals than early to mid-Sukhumvit while still affording convenient BTS access.

Condominiums for rent along Ekkamai BTS generally command over 15% premium in rent compared to condominiums along Phra Khanong BTS, despite being just one station apart. “This means affordable midtown condominiums along mass transit lines with a maximum of two interchanges away from expatriate office hotspots could become increasingly attractive to investors seeking rental properties with expatriate demand as expatriate areas could de-centralise outwards in line with high-growth expatriate nationalities and their respective preferred areas.”
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Joined: Sun Aug 16, 2020 3:11 pm

Sun Oct 18, 2020 2:16 pm

Thailand’s property market waits for an end to Covid-19

The Coronavirus outbreak poses challenges for Thailand’s property market as potential Chinese condominium buyers remain stranded in China. Meanwhile, some believe that the outbreak may bring opportunities for non-Chinese buyers and in the long-run, the Chinese may be looking for an overseas refuge in the event of these types of emergencies popping up again. Through all this, there will be a certain level of pent up demand for Thai real estate. Of course, it’s not just the Chinese unable to come and inspect potential buys, the rest of the world is also mostly shut out of Thailand.

The pandemic is hurting the condominium market as Chinese nationals were accounting for half of the international buyers in Thailand, or 57.6% of the total foreign condo owners in 2018. Vichai Viratkapan, acting director-general of the Real Estate Information Centre says that 50% of Chinese condo transfers are expected to disappear in the first 2 quarters of this year and the total transfer value by the Chinese will miss the mark of the usual 29 billion baht by about 25% (around 7 billion).

However, since Chinese property buyers only make up 6% of the total international and domestic housing transfers in Thailand, the proportion of total housing transfers in the country is likely to be similar to last year. CBRE reports that most Thai developers are postponing the launch of new condo projects to focus on clearing existing stock. “Discounting completed projects to generate quick revenue as a financial lifeboat is the best solution for many of the country’s larger developers whilst the market is in limbo.”

Rathawat Kuvijitrsuwan, head of CBRE Research and Consulting in Thailand believes that, now business is gradually recovering, a few developers have started to launch new condominium projects. “In the first half of 2020, the Bangkok condominium landscape was gloomy with fewer than 10,000 condominium units launched, which was much lower than the total number of new launches in the past three years of more than 60,000 condominium units per year.”

The virus has continued to affect hospitality operators, including hotels and condominiums that service tourists, nationwide. Since China has suspended tours, put restrictions on movement, and locked down cities, home to over millions of people, it also poses a threat to real estate developers as their clients are unable or unwilling to fly.

“Currently multiple off-plan condominium developments are approaching completion, and Chinese clients are unable or unwilling to transfer. Chinese clients who made a reservation in Q4 2019 are requesting a refund and withholding their investment,” said Marciano Bijmohun, Business Development Director at FazWaz Property Group. He believes every condominium that is in transfer status will see the percentage of non-transfer units rise in the coming months. “These non-transfer units will cause a big financial hit to developers.”
If a client refuses to transfer, does not comply with the terms and conditions stipulated in the sales and purchase agreement, and decides to release the property, their deposits will be forfeited. “However, there is some good news, these non-transferred units can be offered with a discount to new clients.”
Also, as China has been susceptible to a few disease outbreaks – from bird flu to the current coronavirus – it may prompt Chinese buyers to look for second homes outside of China.
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Joined: Sat Jul 11, 2020 4:53 am

Sat Dec 05, 2020 2:03 pm

FazWaz accelerates growth in SE Asia Property Market

FazWaz, a leading real estate transaction marketplace headquartered in Bangkok, has raised a new round of funding to accelerate growth into 2021. Serial investor and Online Marketplaces Chairman Simon Baker via CAV Investment Group says he’s been closely following FazWaz for the last 3 years since they first attended our Property Portal Watch Conferences in 2017. “I believe that their mission to use technology to streamline the end-to-end real estate transaction process is the future for real estate sales. Brennan Campbell and his team are very well positioned to be a global leader in real estate e-transactions.”

The latest round of funding will be used to invest further into the marketing, data and technology to ultimately drive FazWaz brand awareness and grow its market share. FazWaz had gone against the traditional startup route and remained 100% bootstrapped for its first 4 years of business while showing 100% growth year on year.

Also participating in the funding round for FazWaz were 500Tuk Tuks, Aries Capital (Indonesian family fund), and Alpha Founders Capital. Having been launched just under 5 years ago by expat entrepreneurs Paul Trayman, Brennan Campbell and Michael Kenner, the brand has expanded across south east Asia with the latest country launch being Cambodia in November. The portal is looking to digitise property transactions in the country and can count some 500,000 visitors per month to its main Thai site having overtaken some big names to rank in the top 3 property portal sites in the country.

Brennan Campbell, Founder & CEO of FazWaz, says that we now live in an on-demand, digital-first society where users want efficient access to products and services at the click of a button. “The real estate industry is no different and users are demanding a better online search and offline service experience. As a mission-driven business, the funding and expertise brought on in this round of investment moves us closer to our goal of empowering consumers to make more efficient and informed real estate decisions.” FazWaz is one of an increasing number of property marketplaces with an end-to-end model that seeks to bring transactions online with users able to make an offer directly on the platform.

Johannes von Rohr, General Partner at Alpha Founders Capital says that Thailand’s proptech (property technology) scene is seeing an exciting amount of activity with two well-known major M&A deals in 2020, one being for and another being “At the same time, a large amount of investment pours into startups tackling the fragmented real estate market. FazWaz re-envision the real estate sales process with technology. We are excited to back FazWaz as they now enter into the next significant phase of growth.”
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Joined: Sat Jan 02, 2021 12:57 pm

Thu Jan 14, 2021 1:55 pm

Bangkok Condo Prices expected to continue to fall 2021

Condo prices in Bangkok are falling and are expected to continue to fall throughout the year. The real estate market isn’t anticipated to pick back up again until the Covid-19 pandemic eases. The average prices of new condos in Bangkok are expected to fall by 5%, according to Nexus Property Marketing. The real estate marketing firm Juwai IQI Group says the average prices for new condos will decline by 3.9% while resale condos price will decline by 6.7%. Juwai IQI co-founder and chief executive Kashif Ansari says this year is an “excellent” time to invest. “Prices have dropped, discounts are available and the market will likely take a sharp turn upwards after the pandemic is behind us.”

Nexus managing director, Nalinrat Chareonsuphong, says that with 33,000 unsold condo units being completed, adding to the unsold stock in Bangkok, the average prices of resale condo units will also decline due to the competition with newly-completed condos. Bangkok condo prices dropped by 11% in the past year, going from an average of 141,800 THB per square metre in the fourth quarter of 2019 down to 126,909 THB per square metre in 2020, according to a report by Nexus. Prices are expected to continue to drop, with the average price dropping to 120,564 THB per square metre this year. Prices are expected to go up to 122,975 THB per square metre in 2022.

The number of new condos in Bangkok dropped by 39% going from 43,051 units in 2019 to 20,100 units in 2020. The number is also a significant difference from the 5-year average of 51,568 units. Many projects were impacted this year either by suspended sales activities or development plans that were delayed or changed. “Last year condo buyers looked for ready-to-move units rather than off-plan units as prices are more attractive. This trend will continue this year.”
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Joined: Sun Dec 20, 2020 11:35 pm

Wed Feb 03, 2021 11:07 pm

100 foreigners allegedly scammed by housing project company

A housing project in the central province Phetchaburi is under fire after it allegedly defrauded around 100 foreigners with damages totalling 2 Billion THB. The housing project allegedly issued illegal land documents and lured in foreign buyers, primarily from the United Kingdom and Russia, advertising the project on websites marketed toward those overseas. Most of the land title deeds for the Phetchaburi Park Project were allegedly for land in a national forest reserve. After an inspection by local officials, the land documents were reportedly revoked. Around 100 foreigners, who all had paid in full to buy land and houses in the project, lost a total of 2 Billion THB.

A petition was filed with the Department of Special Investigation, calling on the department to investigate the alleged fraud. President of the Stop Global Warming Association, Srisuwan Janya, filed the petition with Rusan Ataev, from Russia, and Marcos Hurst, from the United Kingdom, who were both claiming damages. Sirsuwan says 99% of the land title deeds under the Phetchaburi Park Project were inside a national forest reserve, adding that the documents were illegally issued. Local officials reviewed the housing project in July 2020 and reported to the Royal Forest Department that most of the land under the project was in the national forest reserve. The land documents were then revoked.

Hurst claims he purchased a block of land from the housing project for 3 Million THB, but later learned foreigners cannot purchase land in Thailand. The company closed down and the man says he was unable to claim payment for the damages. Hurst lives in Pattaya and has been in Thailand for the past 10 years. He saw an advertisement for the housing project 6 years ago, adding that it was marketed toward foreigners. Since he had owned a condominium unit, Hurst says he assumed he could buy land in Thailand.

Sirsuwan says the company ran other projects in Pattaya and Phuket marketing toward expats in Thailand. He says 98% of the company’s shares were held by British and Russian nationals while the rest were held by Thais. The DSI director general Korawat Panprapakorn says the department may accept it as a special case, adding that his official will check with Royal Forestry and Land departments to find out if the land documents were illegally issued.
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Joined: Mon Sep 09, 2019 11:13 am

Sun Feb 07, 2021 4:12 pm

Thai mega-villa buyers have reignited Phuket’s luxury real estate market

Phuket’s sizable mega-villa property sector has experienced an unexpected surge in multi-million-dollar sales over the past year as Thai buyers sought refuge in the global Covid-19 crisis. Over 5 billion baht (approximately $167 million USD) in primary and secondary high-end properties transacted at the height of the pandemic.

According to new market research from Thailand consulting group C9 Hotelworks, transactions in 2020 in top tier real estate hit its highest level in five years despite flat trading levels in the broader marketplace. Expansive tropical island mansions with four, six or more bedrooms have struck a chord with wealthy Thai’s who have been unable to travel overseas and are fatigued by mounting air pollution issues in the nation’s capital.

Speaking about the transaction charged revival in the island’s mega-villa sector C9’s Managing Director Bill Barnett said “country living and estate villas in the age of pandemic are a strong reaction driven by both internal and external factors. Thailand’s wealthy have been effectively stranded in the country for nearly a year and the impact has seen them revisiting and falling in love with Phuket. Resort real estate remains an emotional proposition and this is a contributing factor in reigniting luxury property sales”.

Aside from the Thai segment, there is more to the Phuket real estate backstory. There’s off plan and completed properties in the primary market, whereas secondary or resales has seen some deep discounting of large villas to overseas buyers. C9’s research has identified one source of these to be the global luxury marketplace Concierge Auctions. One of the key factors that the group has been able to effectively harness is creating competitive tension by means of an auction and inducing demand through the perception of value creation.

Taking a sharper look at locations recording mega-villa trades, C9 data reflects that Millionaires Mile in Kamala, Layan and Nai Thon Beach, all on the West Coast of the island are favorites. While on the East Coast, Cape Yamu continues to perform strongly with the new Headland project. Phuket’s luxury footprint is now also firmly expanding over the Sarasin Bridge into a Greater Phuket catchment with the Aquella integrated golf course community underway.

Noting how proximity of projects is key to success and that there is often only one degree of separation between buyers in mega-villa estates, Bill Barnett points out “one of the most successful twining of projects last year has been the ultra-luxury Layan Residences by Anantara and Avadina Hills by Anantara. The synergy of having a hospitality overlay and hotel-style management to the developments has helped enormously.

While forecasting how 2021 and beyond will see the Phuket luxury property market fare, Bill Barnett voices optimism for primary residences saying “we are seeing considerable interest from Bangkok high-net worth individuals and key regional capitals like Hong Kong and Singapore who are drawn to the island by clean air and space, quality international schools, and strong support infrastructure.

“We are on the cusp of seeing a series of new inland integrated communities such as Tri Vananda in Thalang come on stream and this is expected to shift a larger slice of demand towards luxury single family homes. Covid-19 has refocused an entire generation on the value of work-life balance and proven work from home is a viable ongoing alternative.”
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Joined: Sat Oct 03, 2020 12:35 pm

Tue Feb 16, 2021 2:41 pm

2021 not looking good for Phuket Hotels

An independent real estate consultancy is predicting a bleak year for those involved in the hotel industry on the southern island of Phuket. According to a Nation Thailand report, Carlos Martinez from Knight Frank Thailand says foreign arrivals in Phuket have plummeted by 80%, from over 5.3 million in 2019 to just 1 million in 2020.

Hotel occupancy rates on the island have nose-dived, with some hotels having to suspend operations, while others try to lure domestic travellers with steep discounts and other special offers. On July 15, the Thai government launched a domestic tourism stimulus campaign, in an attempt to get Thais travelling around the country. Domestic tourists can avail of a 40% subsidy on the cost of hotel room and airfares, but, despite this, the number of domestic travellers in Phuket has dropped by 64% year-on-year.

As the Covid-19 pandemic continued to wreak havoc around the world during the second half of 2020, the occupancy rate in Phuket’s luxury hotels dropped to just 14%. The upscale properties that decided to stay open were forced to slash their prices, with the average daily rate falling 7% year-on-year, to just 3,750 baht.

Around 24% of the island’s luxury hotels are in the Patong beach area, with 15% in Karon, 14% in Bang Tao, 13% in the Kata beach area, and 10% in Kamala. Most of these coastal areas are like ghost towns, compared to how bustling they were at the same time in 2019.

While the same goes for other tourist destinations in Thailand, there’s no doubt that Phuket is one of the hardest-hit spots. The airport has been open for domestic flights since June 2020 but recorded only 775,118 domestic arrivals in the second half of 2020, down 57% year-on-year. Domestic tourists did not stay long either, averaging just 1.8 days, making little difference to hotels on the island.

Currently, the future’s not bright for Phuket’s luxury hotels, with average occupancy expected to remain below 25% and average daily rates expected to stay low during the first half of this year. The resurgence of Covid-19 in late December, just as Thailand appeared to have successfully suppressed the virus, has not helped matters. And with China imposing restrictions that prevent its nationals travelling internationally, there is no end in sight just yet.
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Joined: Sat Sep 21, 2019 2:07 pm

Sat Apr 17, 2021 7:58 pm

Covid-19 brings surge in gold and cryptocurrency investment

In the uncertain times of the Covid-19 pandemic, investors are leaning towards safe investments like gold and also the emerging cryptocurrency market. Gold prices hit a 7 week high at over 55,000 baht on Thursday and around April 15 online gold transactions in Thailand doubled. One reason for the rise in gold price is uncertainty, with tensions growing between the US and Russia. Speculators believe gold may reach up to US $1800 during 2021 due mostly to more international tension between the US and China, and the US bond yields on the decline.

Online trading has seen a huge increase, as investors are closely monitoring gold prices, perhaps because they’re stuck at home and on the internet much more during the Covid-19 pandemic. New online accounts are growing as is the trading volume for online gold purchases.

Meanwhile, cryptocurrency has surged in investors and trading to an all-time high, again partially due to the coronavirus pandemic. Bitcoin reached a record price of over 2 million baht per coin this week. And many altcoins are gaining in popularity. The online trading platforms and exchanges for most crypto were not restricted by Covid-19 so the industry is swelling. Coinbase, the biggest cryptocurrency exchange in the United States went public on the NASDAQ stock market on April 14th. Last year’s total revenue for the popular exchange was US $1.2 billion, but the public offering reported earnings of $1.8 billion in the first quarter of 2021 alone.

While gold and cryptocurrency has become a popular way to make money during the pandemic, not all cryptos are created equal and most fail. Watchers have seen a 1 to 2% success rate out of the over 9,000 altcoins that have been created in the crypto boom. Advisors suggest cautious trading and investing in only the top few hundred altcoins.

With online gold trading and cryptocurrency surging ahead, the contrast is stark to brick and mortar industries decimated by Covid-19. Retail, tourism, and traditional banking have all taken massive hits. Kasikorn Bank dropped nearly 3% in the stock market. Only global oil, petrochemical, and electronics success have helped to bolster the Stock Exchange Thailand Index, with PTT Exploration and Production stock climbing over 4%. Covid-19 related industries such as rubber glove suppliers are flourishing with investors speculating on further growth if the third wave continues to spread. Overall though, the stock market rose half a per cent with the announcement that there will not be a Covid-19 lockdown just yet.
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Joined: Mon Sep 16, 2019 11:34 am

Tue Apr 27, 2021 6:33 pm

Foreign investor activities in Thailand

The new wave of Covid-19 infections this month has led to a drop in occupancy rates at Thailand hotels, some reporting drops of 5% to 30%, battering hoteliers that have already been struggling from a year of little to no foreign tourists. Some hotel operators have been forced to sell their businesses, according to the president of the Arjarnnar Asset Management Group, Thammajak Lenuangprasert.

Soft loans and the debt moratorium programme have helped keep some hotels running, but Thammajak says some have decided to sell their hotels to foreign investment groups who have been taking advantage of the low prices. “Currently, there are European and Chinese companies looking to buy 4 to 5 star hotels in Thailand priced at over 2 Billion THB, while 3 star hotels are also desirable provided they are in a prime location… Investors are eyeing hotels in Thailand as our country is a prominent tourism destination, while the outbreak has driven the selling price down and makes it an excellent opportunity to buy.”

While some foreign investors are putting money down on luxury resorts, others are investing in hostels in Southeast Asia. The Bodega Hostel Group, which runs hostels in Thailand, Indonesia, and Cambodia, was just bought out for 450 million baht by the Collective Hospitality Group.

With the new wave of Covid prompting travel restrictions and closure orders, hotel and hostel operators across Thailand are in need of financial aid, according to the president of the Thai Hotels Association, Marisa Sukosol Nunbhakdi. “The government’s soft loan and debt moratorium programme only partly helped the hotel industry… What we really need is a co-payment programme that would help pay half of employee wages to keep the business afloat and maintain employment.”
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