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Hong Kong Investors turn their attention to Thailand

Nov 13, 2017 | Emerging Trends Advisors, Thailand

Thailand is a very attractive proposition for global investors with many flocking to enjoy the excellent returns that can be obtained by investing in the condominium market.

Theerapan Nunthapolpat, general manager of Siam Commercial bank’s Hong Kong branch, told The Nation newspaper that returns in excess of 5% per annum where common place.

He explained: “Condominium units priced between THB5 million and THB10 million are popular with Hong Kong investors in Thailand’s property market.”

Naturally, Bangkok the country’s capital attracts much of this investment, in particular, the Sukhumvit and business district areas. However, there has also been a notable rise in demand in the popular resorts of Pattaya and Phuket – areas that had previously not appeared to be as popular with Hong Kong investors.

It is not hard to understand why these investors are drawn towards Thailand with condominium prices and real estate prices in general being far lower in the Kingdom than they are in Hong Kong. Indeed, many individuals can’t afford to get on the property ladder themselves let alone consider investing in property.

To put this into perspective in monetary terms, condominiums in Hong Kong tend to cost around THB450,000 to THB1.8 million per square metre, whereas condos in the mid-to-upper-range in Thailand are usually priced between THB150,000 to THB250,000 per square metre. Currently, the most expensive condominium project in Thailand is the 98 Wireless project with prices around THB550,000 per square metre – an obvious difference when compared with Hong Kong.

Interest rates in Hong Kong, like much the rest of the world, are at all-time lows to encourage increased borrowing to try an stimulate the economy. This however has encouraged those investors with lump sums with banks to look at alternative ways of generating a return. When you consider Hong Kong banks are offering measly returns of 0.02% it is hardly surprising that investors are jumping at the opportunity to get 5-6% per year.

Theerapan said that the SCB had received several enquiries regarding the purchase of condominiums in Thailand after many of the major developers had held exhibitions in the city. This had brought investing overseas, and in Thailand, to the fore especially with these Hong Kong investors getting frustrated by low returns.

Many of the major Thai developers were already well-known in Hong Kong having successfully sold projects there. Indeed Sansiri president Srettha Thavisin expanded further explaining that they had enjoyed huge success not only in Hong Kong but in Taiwan, Singapore and mainland China after looking to raise brand awareness three years ago.

The policy appears to have been very successful with the company aiming to achieve THB7.5 billion worth of sales from foreign investors, out of their overall presale target of THB36 billion for this year.

Srettha said, “We see strong demand from Hong Kong investors interested in buying condominiums in (Bangkok’s) central business district, especially Sukhumvit Road, focusing on condos priced at no more than THB10 million.

“All of them buy our projects with cash. They also need a property management service if they open their condos for rental, which generates a return on investment averaging 5-8% a year.”

Of course, these types of investment are available in Bangkok but as we have already established it is not the only area that is attracting investors from Hong Kong. Pattaya and Phuket are also enjoying something of a boom from this market. Once again there are plenty of quality condominiums available for under THB10 million but something that seems to be attracting their interest is rental guarantee concepts.

A number of well-established developers and hotel management companies are offering guaranteed returns for periods of between 5 and 20 years. Once again these returns are way in excess of those available in Hong Kong so investors are jumping on the opportunity. The investments are viewed as being low risk and require little to no input from the investor after purchase so are naturally appealing.

The Thai property market is thriving at the present time with significant overseas investment coming from Hong Kong and mainland China.

Investors from the west are also taking up opportunities that present themselves and there appears to be little sign of any slowdown. The fact is, Thailand offers great investment opportunities and more and more people are recognising this.

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