Thailand Chinese Property Report 2019

THAILAND CHINESE PROPERTY REPORT 2019

泰国华人购房报告2019

OCTOBER 2019 EXECUTIVE SUMMARY • Despite a falling rate of growth, in the second quarter • The top Thai destinations for Chinese property buyers of 2019 Chinese buyers nonetheless made 74.2% more are Bangkok, Chiang Mai, Pattaya, and Phuket, with enquiries on Thai residential property than one year the capital of Bangkok taking 41.8% of Chinese buyer earlier. activity.

• Thailand is the most popular country in the world for • The top Chinese regions from which Chinese buyers Chinese property buyers — ahead of Japan, Australia hail are Beijing, Guangdong, and Shanghai. The and the United States. economy in Guangdong alone is more than twice the size of Thailand’s own economy. • Chinese buyers in Thailand are 21% more likely to be purchasing for investment, 148% more likely to be • The Thai baht has gained 9.9% in value against the purchasing a second home, and 189% more likely to be Yuan over the past 12 months, but this has had only purchasing for retirement. a moderate impact on Chinese buying due to the ameliorating impact of falling property prices. • Thailand suits the price conscious Chinese buyer well, given that the average price of the unsold new • Education drives many Chinese buyers, with annual property in Thailand is US$90,146. school fees at the British International School Shanghai Puxi more than 224% higher than at the British • The availability of high quality, low priced medical International School Phuket. care brings many buyers and in particular retirees to Thailand from China. Medical procedures in Thailand are as much as 40 per cent cheaper than in Australia.

Chinese demand for Thai residential THAILAND: CHINESE BUYER ENQUIRIES property has soared since early 2018. rowth ear o ear ight is In the most recent quarter, however, deed uiries et is demand as measured by the number of Chinese buyer enquiries, weakened 5000.0 800.0%

further from its Q4 peak. 4500.0 700.0% 4054.8 The rate of growth in demand on a 4000.0 3636.3 600.0% year-on-year basis also fell to its lowest 3500.0 level since the first quarter of 2018, 3000.0 500.0% although it remained significant. In 2500.0 400.0% 2088.5 the second quarter of 2019, Chinese 1679.8 2000.0 300.0% buyers made 74.2% more enquiries on 1199.1 Thai residential property than one year 1500.0 843.5 200.0% earlier. 1000.0 500.0 100.0% REASONS FOR BUYING 0.0 0.0% Thailand is currently the most 2018 2018 2018 2018 2019 2019 popular country in the world for 1 2 3 4 1 2 Chinese property buyers. Juwai.com’s country ranking, by number of buyer purchasing enquiries made, ranks MOST POPULAR COUNTRIES FOR CHINESE Thailand ahead of Japan, Australia, RESIDENTIAL REAL ESTATE BUYERS Canada, Malaysia, and the United States.

The demand drivers sustaining Chinese Thailand Thailand United States interest in Thai property include several Jaan Australia Australia factors that would be familiar to real Australia United States Thailand estate professionals in other popular Canada Canada Canada markets for Chinese investment, including the US, the UK, and Malaysia. Malaysia United Kingdom United Kingdom Chinese buyers are motivated by Sources: Juwai.com (ranked by number of buying inquiries made) education, medical care, lifestyle, price, recreational, and investment goals. • 148% more likely to be purchasing over the past two years. After steady In Thailand, however, there are for a second home or holiday recent growth, Chinese tourist visits some unique local characteristics home, and to Thailand declined by 4.73% in the to Chinese demand. Compared to first half of 2019 compared to the • 189% more likely to be purchasing their compatriots purchasing in other prior year. Bangkok hopes to increase for retirement. countries, Chinese buyers in Thailand Chinese tourist numbers with favorable are (Juwai user data, full year 2018): Chinese buyer demand is directly visa policies, expedited processing in linked to tourism. Thailand has • 21% more likely to be purchasing airports and other policies. 1 remained the first or second most for the goal of investments, popular destination for Chinese tourists

THAILAND FACTS

The fact that major cities in China are US$250,000 or below (approx. 7.7 as close as a two-hour flight is a benefit million). Thailand suits the price  US$505 that helps draw buyers in all categories. conscious Chinese buyer well, given Billion GDP Proximity is especially important to that the average price of the unsold new Chinese retirees who often travel home property in Thailand is US$90,146. 2 to visit family. Families educating their 38.43% Obtaining access to high quality and Forecast GDP Growth young children in Thailand often split low-cost medical care is another buyer to 2024 their residency so especially appreciate motivation. While many Chinese visit the ease of travel back to China. Thailand as medical tourists for brief Generally, the mother remains in  million stints of care, older Chinese find the 69.5 Thailand with the child, while the father Population easy availability of high-quality and remains in China and then Cheung, affordable care helps make Thailand a then visits during holidays. th desirable place to reside. 27 Price is a very important reason Despite the high standards of out of 211 countries for Chinese buyer interest in Thai local medical care, it is cheap by Ease of Doing Business residential property. Worldwide, the international standards. The Australian medium property price for Chinese government estimates that medical buyer inquiries was US$308,000 Chiang Mai, Pattaya, and Phuket all procedures are as much as 40 per cent (approx. 9.5 million) in 2018. The consistently in the top five. Bangkok cheaper in Thailand than in Australia. 3 largest price category for buyers, accounts for the largest share of however, was for property valued at Thailand’s medical tourism industry Chinese buyer interest, 41.8% in the is a priority for the government and first half of 2019. receives support from the Immigration Less well-known destinations such Office, the Tourism Authority of as Koh Samui and Krabi by contrast Thailand, the Ministry of Public Health, receive a very small share of Chinese 3 CHIANG MAI and the Thai Board of Investment. 3 buying interest. In part this reflects that The top Thai destinations for Chinese relatively little property development is property buyers have changed little underway in those locations compared over the past few years, with Bangkok, to the country’s largest cities.

Top 5 destinations for Chinese property BANGKOK 1 buyers in 1H2019 2 PATTAYA Rank 2019 1H 2018

1 Bangkok 41.8% Bangkok 35.7%

5 KOH SAMUI 2 Pattaya 36.5% Chiang Mai 32.0% 3 Chiang Mai 31.1% Pattaya 31.1% 4 PHUKET 4 Phuket 24.3% Phuket 21.8%

5 Koh Samui 0.7% Koh Samui 1.5%

In Bangkok, Chinese buying enquiries 8000 in the second quarter dropped from the first quarter. They hit their all-time 6000 peak in the fourth quarter of 2018. Due to seasonal factors, year-on-year 4000 growth is most relevant. Inquiry growth was 108.1% in the second quarter, 2000 significant although down from the 515.5% in the first quarter. 0 2018 1 2018 2 2018 3 2018 4 2019 1 2019 2 Enquiries in Pattaya and Phuket followed a similar trend. In Pattaya, the annual growth rate dropping from YEAR ON YEAR GROWTH 459.1% to 78.9%. Phuket’s growth rate fell to 58.4% from 407.4%. In both of these cities, positive growth was 1200% maintained, even though enquiries fell 1000% in absolute terms from the tremendous

800% peak of Q4 2018 and Q1 2019.

600%

400%

200%

200% 2018 1 2018 2 2018 3 2018 4 2019 1 2019 2

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SOURCE REGIONS

HUGE ECONOMIES: Top Chinese source regions for thai property CHINA'S TOP SOURCE REGIONS FOR CHINESE Rank 2019 1H 2018 BUYERS

1 Beijing 11.4% Guangdong 8.37% Guangdong 2 Guangdong 10.5% Beijing 8.15% US$1.4 Trillion

3 Shanghai 10.0% Zhejiang 5.74% Shandong US$1.1 Trillion

4 Zhejiang 10.0% Hebei 4.86% Zhejiang US$0.8 Trillion 5 Shandong 7.8% Shanghai 4.68% Shanghai US$0.5 Trillion Sources: Juwai.com (ranked by number of buying inquiries made, Thailand only.) Beijing US$0.4 Trillion

The top source CURRENCY Thailand US$0.5 Trillion regions for Chinese The baht has confounded many in the country by going from strength Source: Juwai.com, National Bureau of Statistics of individuals who to strength, due in part to the policy China, Trading Economics, World Bank buy property in of Thailand’s central bank and the country’s large trade surplus. While the Thailand are baht has risen only about 5.4 per cent predictably among against the U.S. dollar this year, it has China’s wealthiest. gained 9.9% in value against the Yuan over the past 12 months.

Beijing, Guangdong, and Shanghai The strength of the baht has had Guangdong’s gross regional product of a moderately negative impact on ¥9.7 trillion (US$1.4 trillion) is the largest Thailand’s appeal for property in China 4 and in itself is more than purchase. However, the relatively twice the size Thailand’s economy, low cost of living and low property whose 2018 GDP was 16.32 trillion baht prices ameliorate to a great extent HOW MANY YUAN DOES (US$504.9 billion) 5. the increase in the baht’s value. The ONE THAI BAHT BUY? baht has gained 9.9% in value against Beijing is China’s wealthy capital 0.22776 the Yuan over the past 12 months. 0.20728 city region. Shanghai is home to The stronger currency has also been 0.19296 China’s largest city and commercial partially offset by property prices. 1-Year powerhouse. Zhejiang is one of China’s Asking prices for new condos in Change biggest light industrial centres and Bangkok are down 6% year-on-Year. 6 +9.9% home to ecommerce giant Alibaba. AUG-14 AUG-18 AUG-19 Shandong has China’s third largest regional economy, estimated at ¥7.6 *At close on each date shown **Source: XE.com trillion (US$1.1 trillion) in 2018.

Education is a primary driver for schools are Bangkok and Chiang Mai.7 Chinese investment, with Chinese More than one thousand Chinese School Fee in US$ children making up the fastest growing families reside in Chiang Mai alone and British International 8 $ 14,109.63 segment of the cross-border student have their children in the local schools. School Phuket* population. Thailand education sector Chinese families who choose to British International $ 45,715.24 is positioning itself to become the hub educate their children in Thailand School Shanghai in Southeast Asia for quality private Puxi** tend to cite the fact that international education. They can offer lower fees schools put less pressure on their than do similar schools in mainland * Inclusive of boarding costs children. International school ** Inclusive of 3% discount for full prepayment, no China yet highly regarded American education is designed to give children boarding cost. and European curricula, facilities, and a chance to explore their full range of educational staff. Children studying interests, develop more wholesomely, comparable education in China. in Thailand also benefit from the high and to become independent thinkers Juwai.com’s own comparison quality of life, lower living costs and and problem solvers. This is different found the annual school fees for a better environmental quality than in than than the focus on cramming for British International School in China mainland China. high-stakes exams present in some are 224% higher than the fees for Chinese schools. a British International School in While in China, parents are sometimes Thailand. This comparison is even expected to provide red envelopes of more striking for two reasons. First, cash to their children’s teachers, this is the British International School not the practice in Thailand. Phuket is a boarding school. The fees therefore include boarding costs, Some Chinese families face obstacles which substantial boost the cost. to enrolling their children in local Second, we compared the fees using schools of their choice in the cities the discounted fee that the British where they live in mainland China. International School Shanghai offers to If the families do not have Hukou, parents who prepay for the year in full. or residency, their children may be excluded from the school system. It is common for Chinese families from China’s large cities who accumulated For these reasons, many Chinese wealth through appreciation in parents desire to enroll their children the Chinese real estate markets to into international schools at home, in purchase several income-generating mainland China. These schools are properties in Thailand. They then expensive and competitive, however. There are now more than 200 English- might rent and live in a villa near the The Thai educational sector is language international schools in school of their choice and use their attracting a rapidly growing number Thailand, ranking the country third in rental income to fund their living of Chinese families frustrated by Southeast Asia and ninth in the world. expenses. Thai law does not allow their experience at home. Even after Thailand’s international schools host foreigners to own landed property, including the cost of maintaining a some 73,000 students, employ more so they cannot legally buy the land second household in Thailand, families than 8,000 instructors, and generate outright. US$845 million in revenue per year. pay less for a quality international The largest centers for international school education in Thailand than for a

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Contact:

Dave Platter, Juwai.com +61 432 814 888, [email protected]

Sources:

1. Bangkok Post, http://bit.ly/2TAjEEf 2. Juwai.com, Agency for Real Estate Affairs, Bangkok Post 3. Austrade http://bit.ly/33yScLv 4. National Bureau of Statistics of China 5. Trading Economics, World Bank 6. Knight Frank 7. ISC Research 8. https://mp.weixin.qq.com/s/BTN8R5jTaSgYYuEEb70WWw