Foreign money heading into Bangkok are driving up Thailand’s real estate markets, even as the local developers are already struggling to meet property sales targets. In particular, the foreign buying binge are upping the prices of luxury apartment rentals in Bangkok, which can be somewhat problematic for the average Thai resident.
For example, a luxury condo; the 98 Wireless, opened last March, with one buyer from Hong Kong immediately buying an apartment suite worth a whopping $2.2 million. According to UthaiUthaisangsuk, an executive of SansiriPcl., the project’s developers.
Something like this are becoming more and more commonplace in the Thai capital, which can be problematic. Thanks to the 2014 economic slowdown that the country the average Thai resident has household debt that makes it hard for them to get properties, find apartment rentals in Bangkok, or qualify for home loans, which is why local developers like Sansiri have been aiming to sell luxury properties to foreigners.
Colliers International Group Inc.’s General Manager for Thailand,RatchaphumJongpakdee, says that local developers are running into a lot of obstacles when it comes to selling properties to locals, but they’re meeting no such issues when it comes to selling to foreign buyers.
Whilst Bangkok’s real estate prices have gone up recently, doubling within the last five years, the pricing in the capital is still lower than in the less frequently travelled cities in the region, like Jakarta, Kuala Lumpur or Ho Chi Minh City, according to real estate advisors.
Though some are saying that the price gap could soon be closed, as Bangkok managed to surpass London as the world’s most visited city in the world, with 19 million overnight travellers, which is about two for every Thai resident, which has led to putting the city under the spotlight for foreign investors, in particular the mainland Chinese investors.
The problem is that Bangkok real estate is a premium, best exemplified by the sale of Britain’s Bangkok embassy back in January, recorded to be the country’s most expensive real estate deal in the history of the country. The purchase was made by a partnership between local and Hong Kong developers, amounting to about US$600 million for a plot of land the size of about six football fields.
Ratchaphum says that it isn’t uncommon to have developers knock on doors of embassies, businesses and even homeowners; anyone with real estate in Central Downtown Bangkok.