Chinese investors have continued pouring their money into Thailand’s property sector even as the kingdom barrels toward an uncertain national election.
That underscores the Southeast Asian nation’s enduring popularity with the Chinese — tourists from Asia’s top economy have for years seen Thailand as a top spot for holidays. According to recent data from online Chinese real estate portal Juwai.com, Thailand was its most popular country when it comes to inquiries from potential real estate buyers in 2018 — climbing up from the sixth spot in 2016.
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Thailand will hold general elections on March 24, but Juwai CEO Carrie Law said the company hasn’t seen “a link between the Thai election and Chinese property buying.”
“While the election is momentous for Thailand, most of the buyers we work with are unconcerned about the outcome,” she told CNBC.
Thailand’s economy has been powering ahead since its 2014 coup, reaching 3.9 percent GDP growth in 2017. That was its best in five years, but that growth is expected to slow a bit this year due to weaker global growth,the World Bank projected.
Even though that recent coup was the second in less than a decade, the political upheaval did little to cool Thailand’s huge property increases.
In fact, Sansiri — one of Thailand’s biggest developers — set up its international business unit in 2014 after seeing growing interest from foreign buyers, said Nanmanas Jiwattanakul, the company’s assistant executive vice president of international business development.
Chinese buyers make up 70 percent of Sansiri’s international sales, she said.
The development — not spurred by any marketing efforts — prompted the developer to set up showrooms in Thailand and overseas catering to such investors, she told CNBC.
“We started to drive (international sales) and also because we started seeing a number of foreign buyers in Thailand,” said Nanmanas.
Foreign buyers have not been deterred by the country’s political limbo over the last five years as the Thai economy, business processes and policies have showed consistency and resilience despite numerous government changes, Nanmanas added.
Thai property prices have roughly doubled in the last decade, so investors see the country as good place to grow their wealth, Nanmanas said. Still, she added, it’s more than just financial calculus leading people to purchase property in Thailand, they’re also buying holiday or retirement homes.
Thailand was the fourth-most-popular country for Chinese property investment in 2018, according to Juwai. With $2.3 billion coming in from Chinese sources, the Southeast Asian nation ranked behind only the U.S. ($30 billion), Hong Kong ($16 billion) and Australia ($14 billion.)
That helped Sansiri record whatits chief operation officer called the company’s “best year ever” in 2018. The property firm saw its highest sales from international markets ever, as such revenues jumped 51 percent from 2017 to reach 14 billion Thai baht ($446 million,) the executive told a press conference last week.
Even so, Sansiri CFO Wanchak Buranasiri said the company has set a “conservative (spending) target” in 2019 due to political uncertainty this year.
New government to improve investors’ moods
The upcoming Thai election has already been marked by unexpected developments, including a member of the king’s family entering the race for the prime minister position.
Still, the end result of the race is likely to improve overall investor sentiment in Thailand, according to Kasem Prunratanamala, head of research at CIMB Securities in Bangkok.
He told CNBC that’s because processes that were stalled during the period of military rule, such as trade deal talks with the European Union, are expected to resume after a democratically elected government takes office.
Foreign direct investment from major investors mainland China and Hong Kong is also likely to increase due to Beijing’s trade dispute with the U.S., Kasem added.