Emerging Markets
We expats are all a bit of a mixed bag here – British, Australian, American, Scandinavian, French, German, Kiwi and even the odd lovely Canadian. But these groups really do pale in comparison to the sheer numbers of Asians and Eastern Europeans that are flooding into our fair city. I thought I’d touch on what I see are the main emerging markets on the Pattaya property scene, outside of the Thais themselves, of course.
The ‘Chinese’
Now I put this in quotes as it really incorporates Hong Kong, mainland China and also the Taiwanese markets. Visitors from Hong Kong have been purchasing in Thailand for many years, primarily in Phuket and Bangkok, but the emerging markets now seem to be both the Taiwanese and mainland Chinese.
The figures on the amount of Chinese visitors expected in the next few years varies wildly depending on the source, but most seem to believe the numbers will double in the next couple of years. They are already the #1 country for visitors to Thailand and the increase in numbers is staggering. In 2011 there were 1.7 million Chinese tourists in Thailand. In 2012 that number increased to 2.8 million – an increase of almost 60%. By 2015 this number will be over 5 million.
To try and slow down speculative property purchases in their own country, the Chinese government recently made a law that every citizen may only own one property in their own name. This has now led to many seeking property investments outside their own country, and one country is proving to be very attractive to them – Thailand.
I personally don’t think traditional selling methods and marketing will prove to be too successful when dealing with this emerging Chinese market. I think the Chinese are quite similar to Thais in the respect that they won’t simply walk into a real estate office looking to buy property. I believe most purchases will be done through private networks and direct contact with development companies themselves. The one thing that will prove to be a barrier here, however, is the language issue. I foresee an influx of Chinese speaking ‘go betweens’ who will assist in working between local developers and agents and their Chinese clients.
The Russians
Every so often when I’m stuck for new material to write about I revisit some of my old articles for a bit of inspiration. I came across an article I wrote in 2006 entitled ‘The Russians Are Coming! The Russians Are Coming!’, in which I spoke of the ‘emerging’ Russian market. While it’s true that Russians have always had a presence in Thailand, check these stats out – in 2006 there were 187,000 Russian visitors. In 2012 there were 1.3 million. Absolutely incredible. Cheap & easy flights, easy visas and most importantly, accommodation for the Russian language have made Thailand, and Pattaya in particular, a haven for the Russian traveller. How many places in the world accommodate the Russians like we do here – even local Irish pubs now carry menus in Russian.
My company was one of the first in the area to have a full-time Russian agent on staff, but by 2008 I think about 80% of the major agencies in the area saw what an opportunity there was. And while their buying power seems to have dwindled a bit these past couple of years, I truly believe they will still be a major player in the Pattaya property market for years to come.
The Golfers aka The Japanese & South Koreans
An interesting stat is that there are more Japanese visitors to Thailand than there are Russians. So why aren’t more realtors targeting Japanese clients? My guess is that Japanese are typically more shrewd investors. It’s quite well known that the Japanese have put a ton of money into Thai banks and the stock exchange in the past few years – a good part of the reason why the Baht has stayed so damn strong for so long. Interest rates in Japanese banks are nearly non-existent (a far cry from their 80’s heydays prior to their ’90 and ’97 crises) and their stock exchange still too volatile, so the 3 – 4% they secure from banks in Thailand looks very attractive. I’m not saying there aren’t any Japanese buyers in Pattaya – we still deal with at least a few every year – but perhaps this really is an untapped market.
The South Koreans are a very nationalistic country – and that’s not necessarily a bad thing – it’s what’s helped them achieve probably the biggest economic turnaround in the history of the modern world. Anyone who has spent any time there at all will tell you that every car on the road, every TV set you see is made in S. Korea. The duty on imports has made buying anything imported prohibitively expensive. Besides this, Koreans take great pride in supporting their own economy, so buying an imported car may actually make you look bad in the eyes of others.
This nationalistic pride and mentality also previously extended to offshore property holdings. It was very difficult for South Korean nationals to purchase property outside their country up until just a few years ago when their government eased these laws. While still in its infancy as it’s a new concept to Koreans, off-shore property purchases are on the rise and I do foresee Thailand as a major destination. With over 1 million visitors last year, South Koreans are the fifth largest tourist group to Thailand and I do estimate that in the very near future we will see more purchases by them as a whole.
I very surprised that no developers have really targeted the Japanese and South Korean golfers. Golf course time-shares, condos, resorts? Anyone? Bueller?
