Bangkok certainly has plenty of condos waiting for eager buyers. As such, developers are looking towards Chinese tourists and investors as being their next customers.
However, the twin effects of a strengthening baht and a weakening Chinese Yuan have conspired to make Thai property a harder sell than would otherwise have been the case. In January 2017, one Chinese Yuan bought 5.15 Thai Baht but now the rate sits at barely 4.6. It means that Chinese buyers have to find approximately 10 per cent more money in their local currency to buy the same amount of Thai baht. A trend has been in place that almost looks like a straight line down, and things could set to continue along the same route with no catalysts in place to signal a reversal.
Yet even with the stronger baht, Thai property is still considerably less expensive than similar properties in China, and so they are still relatively affordable.
The strengthening exchange rate may also be looked at as a positive. It could be seen as a safe haven for Chinese money, since if the Yuan weakens further, holders of the Yuan will lose out even more.
As well, the trend could provide impetus and even urgency to complete a transaction before things get worse for Yuan holders.
Condo developers are at a slight disadvantage to housing developers in that that once they start construction they have to finish it in its entirety. This could take 2 or 3 years or more. Housing developers can construct fewer houses quite easily and draw back supply as they see fit.
Of course it is condos that are more popular with overseas buyers since they can buy the unit on a freehold basis up to a ratio of 49 per cent foreigners vs. 51 per cent Thai holders within a single project.
Bangkok is home to around half of Thailand’s condo supply and so is a key hotspot that developers are targeting in order to move the backlog. There were approximately 591,000 condo units completed at the end of 2018 with another 90,000 condo units under construction.
The number of Chinese tourists grew quite dramatically in the last few years but the fear is that the currency exchange rate could dent this growth just at a time when the influx is more needed than ever.
Buyers from China and Hong Kong were responsible for forty three per cent of all the money transferred in to Thailand from overseas for condo purchases last year, a number not to be overlooked.