Thailand maintains its appeal as an attractive destination for foreign property buyers, especially for those seeking a second home, despite specific limitations on property ownership.
As the situation gradually stabilises and returns to normalcy post-Covid, the allure of Thailand's real estate market is growing stronger.
Notably, sales figures from foreign customers in the first quarter for some property developers have seen a significant surge, even in the absence of Chinese buyers who played a prominent role during the 2018-19 period.
The market could even be stronger once Chinese nationals resume their international trips, bringing about a promising future for foreign property investment in Thailand.
WHY DO FOREIGNERS PURCHASE RESIDENTIAL PROPERTY IN THAILAND?
The underlying reasons are no different from the reasons why foreigners choose to visit the country.
An affordable cost of living, delicious cuisine, warm hospitality, convenient travel options and distinctive culture contribute to the appeal.
Most foreigners who invest in real estate in Thailand have experienced the country as a tourist before.
In recent years, several factors have been added to attract foreign buyers, including relocation from their home country, education for their children and investment opportunities.
According to the Phuket Real Estate Association, the largest group of foreign visitors arriving in Phuket between Nov 1, 2022 and March 7, 2023 was Russian nationals, with 387,329 visitors in total.
At the same time, Russian buyers emerged as the leading market in terms of condo transfers in Phuket in 2022, up from second spot during 2020-21 when Chinese buyers still dominated the market.
This turnover has been visible since the Russian-Ukraine war commenced in February 2022, according to the Real Estate Information Center (REIC).
Artitaya Kasemlawan, head of residential sales -- project, advisory and transaction services at property consultant CBRE Thailand, said Russians have emerged as the primary buyers in the Phuket property market after the pandemic.
"Russian buyers are particularly drawn to pool villas with 2-5 bedrooms, as they seek more space for their families. The price range for these villas typically falls between 20 and 60 million baht, making them an attractive option for Russian buyers," she said.
Boon Yongsakul, chairman of Phuket-based developer Boat Development, said Phuket boasts stunning natural beauty and its marinas are recognised as being among the best in the world.
"With 13 international schools offering British, American and French curriculums, many parents relocate their children from Hong Kong and Singapore to Phuket," he said.
The less crowded environment also played a crucial role in attracting these families seeking a safer and more serene location for their children's education.
"This year, there has been a significant increase in the total number of students enrolled in the top five international schools," said Mr Boon, who is also vice-president of the Phuket Real Estate Association.
"This rising trend will drive property purchases in the area."
Phuket was proclaimed the "City of Gastronomy" by Unesco in 2015, due to its variety of culinary offerings, including Southern Thai cuisine, Hokkien dishes, other traditional Thai foods, as well as a wide selection of international options.
"Education, food and healthcare will bring in more buyers of luxury villas," he said. "Last year, sales of luxury villas rose 30%, particularly units in contemporary Thai style priced 10-50 million baht. Key buyers were Westerners living in Singapore."
WHAT IS THE LARGEST MARKET IN TERMS OF BUYERS?
During the past five years, purchasers from China have been the leading nationality in terms of receiving condo transfers, accounting for 49% to 63% of the total, according to REIC.
"Despite difficulty in terms of outbound travel, Chinese buyers remained the largest group receiving condo transfers in Thailand last year," said Vichai Viratkapan, acting director-general of REIC. "They accounted for nearly 50% in terms of both volume and value."
He said the primary motivation behind their purchases was investment, as Chinese buyers opted for smaller-sized units compared to other foreign buyers.
In 2022, the average size of preferred units was 39.2 square metres, while the overall average size was 45.9 sq m.
Furthermore, the average unit price for Chinese buyers was 5.1 million baht, equivalent to 1 million yuan, an affordable amount for middle-income buyers.
Chinese buyers also stood at the top position in seven out of the 10 major tourist destinations in Thailand, including Bangkok, Chon Buri, Chiang Mai, Samut Prakan, Nonthaburi, Pathum Thani and Rayong.
Kajonsit Singsansern, chief executive of property developer Siamese Asset Plc, said the Chinese wanted to have a second home in Thailand after visiting as a tourist. They also looked for the potential return on investment.
The majority of Chinese buyers were those in the middle-income segment. They typically spend around 1-2 million yuan or 5-10 million baht to purchase a condominium unit, with Bangkok being the primary destination.
Other popular locations for them include Phuket, Pattaya and Chiang Mai.
Chanin Vanijwongse, chief executive of property developer Habitat Group, said demand for condos and villas in Chon Buri from Chinese and Russian buyers has been strong since the beginning of the year.
"Property agents targeting Chinese and Russian buyers have returned as their buyers are coming back," he said. "Most of the popular units are three-bedroom pool villas priced above 10 million baht."
WHAT ARE EMERGING MARKETS?
Karlo Pobre, managing director of CIM Property Consultants, a Yangon-based property consultant, said certain affluent citizens of Myanmar were looking to acquire second homes in more secure and stable countries, such as Thailand.
"Many families from Myanmar purchased second homes in Thailand for three reasons," he said. "They want to invest to preserve wealth, take advantage of healthcare services in Thailand and provide educational opportunities for their children."
According to REIC, Myanmar was ranked as the sixth largest market getting condo transfers in Thailand in 2022.
This marked the first year that Myanmar buyers entered the top 10 ranking, with a total of 349 units transferred.
In terms of value, buyers from Myanmar were in third place, with transactions of 2.55 billion baht. They were second only to Chinese and Russian buyers, edging American, British and French buyers at third, fourth and fifth, respectively, in terms of the number of units transferred.
The average price per unit for condos transferred to buyers from Myanmar last year was the second highest among those transferred to foreigners, at 7.3 million baht, following Taiwanese at 7.4 million baht. The average price was 5.1 million baht.
Mr Pobre said the average price per unit for a condo in Yangon was US$250,000 or 8.5 million baht with an average size of 70-100 sq m or two bedrooms, as they live as a large family of two or three generations.
"At the same price brackets, condos in Thailand have relatively better quality and are more investment proof," he added.
Bangkok was the top city when buyers look for a second home and want to buy a condo unit in Thailand. They preferred Sukhumvit because it is near mass transit lines, followed by locations with proximity to healthcare services and educational institutions.
Besides the large amount of condo transfers, Myanmar nationals continued purchasing new condos in the first quarter of this year, according to property developer Noble Development Plc.
The company reported that buyers from Myanmar were the second largest buyer with around 360 million baht in condo presales, which accounted for 26% of the total presales of 1.4 billion baht recorded from overall overseas markets.