Lack of Chinese Investors Creates Condo Glut in Thailand

Chinese investors who formerly snatched up luxury real estate in Thailand are scaling back their activity in response to the country’s slowing economy and housing market. The luxury condo and apartment market in Thailand has benefited for years from the fact that many Chinese invest as much as 70% of their money in real estate.

According to Juwai IQI Group co-founder and CEO Kashif Ansari, who spoke with VOA’s Korean Service, the upward trend in Chinese investment in Southeast Asian real estate has just plateaued. The company has offices in Kuala Lumpur and elsewhere in the region.

“This year, Thailand is no longer the number one destination for Chinese buyers like it was in earlier years,” Ansari wrote in an email. “Instead, it is fifth, and the top four destinations are all the traditional English-speaking countries with prestigious educational sectors.”

According to VOA, the company’s report, Thailand topped the list of the top 10 nations where Chinese investors wanted to purchase homes in the years 2018 through 2021. In 2022, Thailand occupied the number four spot, but by the middle of 2023, it had dropped to fifth.

The Real Estate Information Centre of Thailand also discovered that beginning in 2018, Chinese purchasers made up the largest foreign group acquiring condominium units in Thailand, purchasing 3,562 units in the first nine months of 2022 for over $511 million.

According to Ansari, an increasing number of Chinese are purchasing permanent residences in Australia. The majority of Chinese buyers of Thai homes are speculators.

“Most Chinese buyers [in Australia] this year have been purchasing for their own use and are on the path to becoming new Australian citizens,” said Ansari. ” Many of the purchasers we assist are either now enrolled in school in the target country or are preparing to relocate there and buy a home.

Thailand’s Condo Glut

Nonthaburi and Samut Prakan’s new condo price index has fallen for four consecutive quarters due to an excess of unsold units in older developments, especially in price ranges hit hard by negative factors.

According to Real Estate Information Centre (REIC) interim director-general Vichai Viratkapan, older projects that have been on the market since before 2021 are a contributing factor to the continued drop in the price index for the two provinces.

Unsold condo units were plentiful in complexes that had been on the market for more than three years in these states. The development costs for these projects were less than for newer ones, he noted.

As of the end of the second quarter of 2023, REIC reported that Nonthaburi has 6,705 unsold condo units for a total of 14.8 billion baht. More over half of these homes had been built (3,485 total) and 87% were sold for less than 3 million baht.

There are currently 5,991 unsold condo apartments in Samut Prakan with a total value of 23.2 billion baht. Only 825 of these apartments had their construction completed, but of those, 86% were selling for less than 3 million baht.

Despite the fact that condo units in these buildings were priced lower than newer developments, the purchasing power of the target customers has been hampered by the significant rise in interest rates.

Buyers in the lower-income bracket had a more difficult time qualifying for mortgages because to the high amount of household debt, which exceeded 90% of GDP.

Therefore, in the third quarter of 2023, developers in the affordable condo market ran appealing ads and promotions in an effort to increase sales. Cash discounts were the most sought after.

“Discount campaigns were used in projects that were launched before 2021 as development costs remained at their previous levels, while the prices of construction materials and labour costs increased in the past few years,” Mr. Vichai stated.

The REIC reported that in the third quarter of 2023, the median sales price of newly constructed condos in Bangkok and its two neighbouring provinces was 155.0, up 1.2% from 153.2 in the third quarter of 2022.

This was the third annual increase in a row, beginning in the first quarter of 2023.

Condominium prices in Bangkok have increased for three consecutive quarters according to the price index, while prices in Nonthaburi and Samut Prakan have decreased for four consecutive quarters beginning in the fourth quarter of 2022, a reduction of 2.1%.

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