Thailand’s Property Market Cools as Chinese Head to Australia and Canada

Thailand has dropped to fifth place below Australia and Canada among Chinese property purchasers, down from last year and the top spot in 2021, owing to a slow travel recovery, expensive flights and market speculation.

According to Kashif Ansari, co-founder and group chief executive of Juwai IQI Group, a real estate marketing agency targeting the Chinese market, Chinese purchasers with lower budgets, who were historically Thailand’s main market, now make up a smaller share of all passengers.

“The pandemic had a devastating impact on outbound travel,” he explained.

“The rapid annual growth that propelled China to the top of the world’s tourist destinations came to an end in early 2020.” However, 2023 will be a watershed moment in the country’s recovery.”

Thongchai Busrapan, co-CEO of SET-listed Noble Development, said Chinese clients are still purchasing condo units at a lower rate than before the pandemic, but the trend is improving.

“The slowdown among Chinese buyers is due to a limited number of flights to Thailand and higher airfares,” he explained. “Several of our Chinese customers informed us that passport renewal was also difficult.”

Thailand;s Noble’s condo sales to Chinese buyers fell to 30% of overall sales to international buyers in the first half of 2023, down from more than half in 2019 and previous years.

According to Mr Thongchai, Taiwanese buyers have surpassed Chinese purchasers in the #1 spot because they choose the Thong Lor, Nana, and Rama IX regions. According to Juwai IQI, prior to the epidemic, Chinese visitors were the world’s largest outbound market.

Mainland travellers conducted 155 million outbound journeys and spent more than other nationalities on average, totaling US$255 billion, accounting for 17% of worldwide outbound travel expenditure.

According to UN figures, Chinese accounted for 30% of incoming visitors to Japan and 28% to Thailand.

Chinese tourists accounted for 16% of non-EU visitors in Germany. “Thailand expects at least 5 million Chinese visitors this year, down from about 13 million before Covid-19,” Mr Ansari stated.

He said that, depending on the destination, Chinese foreign property transactions dropped by more than 50% during the pandemic.

According to Mr Ansari, this revealed that about half of the transactions were dependent on the ability to travel. “As a result, we’re keeping an eye on the resumption of international travel,” he explained. “Wherever Chinese consumers step off the plane, increased property investment will follow.”

According to Juwai IQI, the top five nations for Chinese property purchases this year are Australia, Canada, the United Kingdom, the United States, and Thailand.

The top four are all prosperous Anglophone countries with world-class educational systems. Outbound Chinese travel has recovered, but not as quickly as many thought.

There is still a flight deficit, which keeps rates high. Capacity is barely 37% of what it was before the outbreak. Mr Ansari believes that China’s slow economic growth and volatile property markets are encouraging purchasers to go elsewhere.

The number of upper-middle and high-income households in the country is increasing, with an additional 71 million expected by 2025, bringing the total to 209 million. According to him, this implies a promising long-term demand for Thai tourism and property.

Chinese Property Buyers Investing Out of China

The Chinese have a lot of money to invest as well. According to official figures, the value of Chinese savings accounts increased by 26.3 trillion yuan (124 trillion baht) in the first nine months of 2022.

Immigration is on the rise, with 712,000 Chinese expats projected in Australia, Canada, and the United States by 2025. By 2025, the United States expects 3.7 million new migrants, including 513,000 from China.

Chinese citizens also participate in the majority of long-term visa programmes, often known as golden visas, accounting for 35% of the 20,844 Thai Elite members as of October 1, 2022.

Since borders reopened, traffic from China has recovered quickly, though not as quickly as many had hoped. The most significant impediment to a faster recovery is airline seat capacity and ticket costs.

For example, during the Dragon Boat Festival vacation, foreign airfare was double what it was in 2019. According to the National Immigration Administration, cross-border travel has rebounded to 65% of what it was in 2019.

Ctrip, a Chinese travel service provider, said that travel costs have gradually fallen. One-way air tickets, for example, cost 6% cheaper in June than in May. Hong Kong, Macau, Bangkok, Tokyo, and Singapore were the most popular destinations.

According to the latest Juwai IQI rating, Australia and Canada are the top overseas destination for Chinese property buyers in the first half of this year. Chinese desire for real estate Based on the amount of buyer inquiries received on the platform, Down Under surpassed their interest in other prominent markets such as Canada, the United Kingdom, and the United States, according to the research.

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The United Arab Emirates jumped from 13th to eighth place in 2021. Germany dropped out of the top ten, which also featured four Southeast Asian nations.

Over the next few years, a prolonged outflow will most certainly force Chinese property investments outside. According to the survey, around 712,000 people from the country will travel to the United States, Canada, and Australia between 2023 and 2025.

Capital flight from the mainland might surpass US$150 billion this year, as more people flee to safer havens in the face of new domestic regulations.