Chinese likely to pour more money into Thai properties

Chinese likely to pour more money into Thai properties

A prospective homebuyer asks for information of a project showcased at the House and Condo Fair in early October last year in Bangkok. (Photo by Tanaphon Ongarttrakul)
A prospective homebuyer asks for information of a project showcased at the House and Condo Fair in early October last year in Bangkok. (Photo by Tanaphon Ongarttrakul)

Chinese institutional investors will likely play a bigger role in the Thai property market despite limited activity over the past few years, according to JLL, a professional services firm specialising in real estate.

"Chinese companies have been actively looking for opportunities to invest in a wide range of real estate assets in Bangkok and major resort markets. Despite the keen interest, investment activity by the Chinese to date has remained limited with most of the transactions being joint ventures in property development projects or acquisitions of stakes in Thai property development companies," said Suphin Mechuchep, managing director of JLL Thailand.

Among the major Thai-Chinese joint-venture projects is the Baba Beach Club Phang Nga, with 16 hotel villas, 104 residential suites and 42 villas, between China’s Junfa Real Estate Co Ltd and Charn Issara Development Plc.

Another is The Terminal Phuket, a mixed-use development consisting of a condominium, a hotel and serviced apartments, a community mall, an office building and a clubhouse in the resort island, in which China's Royal Lee Asset became a major investor.

The state-owned China Tianchen Engineering Corporation also holds a major stake in the 30-storey Artemis Sukhumvit 77 condominium in Bangkok. 

"It is apparent that Chinese investors have a strong appetite for investment opportunities in Thailand. A rapidly growing number of enquiries that JLL offices in Thailand and China have received exemplifies the case. However, most of these investors have adopted a cautious approach at this point, needing more time to explore alternative investment options available and to understand relevant laws and regulations," said Mrs Suphin. 

"As more Chinese investors better understand the investment landscape in Thailand’s real estate sector, we expect more Chinese investment soon," she added.

Mike Batchelor, managing director for Asia investment sales, JLL’s Hotels and Hospitality Group, said: "We expect to see more activity from Chinese investors in 2017 as the Chinese have invested heavily in overseas real estate and continued to look for opportunities abroad to diversify their risks. Thailand is considered to be one of the most attractive markets in the region, particularly for hospitality-related investment."

Mr Batchelor’s view is supported by a separate report by JLL.

According to JLL’s Global Capital Flows, China made a record US$33 billion in overseas commercial and residential property investment in 2016, an increase of nearly 53% year-on-year, 

While investment in land, offices and hotels account for 90% of all Chinese outbound capital in the last three years, the hotel and industrial sectors showed the largest increase in 2016 due to significant transactions in the US in the form of portfolio sales and Chinese appetite for industrial parks. 

"Hotel activity last year was boosted by the purchase of Strategic Hotels and Resorts by Anbang Insurance for over US$6 billion," said David Green-Morgan, JLL’s global capital markets research director.

"China Life Insurance has secured assets across the hotel and office sectors with portfolio purchases from the Starwood Capital Group and an office tower in Manhattan; sovereign wealth fund Chinese Investment Corporation has been active in the office sector in New York as well," he added.

Land acquisitions by Chinese investors made a comeback last year, with a rise of 44% following significant transactions in Hong Kong, Australia and Malaysia. 

"We do believe that Chinese investors will continue to be major movers of capital into global real estate for many years to come," said Mr Green-Morgan. "But a similar increase in 2017 may be challenging given the recent discussion about China monitoring its capital outflows."

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