Thailand’s reputation amongst foreign fund investors has dropped eight places year-on-year in a new report.
The report also revealed that 80% of foreign buyers of condominiums in Bangkok are currently from either Hong Kong or China.
The Emerging Trends in Real Estate report for 2018, produced jointly by PwC and the Urban Land Institute, noted Bangkok’s position within Asia-Pacific as 16th for investment and 16th for development.
The report said that Thailand had endured a shaky reputation among foreign fund managers because of numerous coups and other political crises in recent years.
That said, the report noted how Thailand’s economy and real estate markets continued to tick along notwithstanding the problems, but with rentals and capital prices trending steadily higher.
“Given this, the bigger obstacles for foreign investors looking to buy commercial assets in Bangkok are a shortfall of investable stock combined with a very illiquid market.”
“When assets do trade, transactions have long been dominated by local developers and investors. The same applies to prime land sites, with a relatively small number of new projects in the pipeline.”
“At the same time, there has been increasing activity by capital from Japan, Singapore, and, most recently, China seeking to participate in central business district office projects in partnership with local players.”
Highlighting one area for investors, the report said: “Probably the obvious option for international investors in Thailand is the tourist sector, with new arrivals – particular from China – growing hand over fist.”
Resorts, it said, were the asset class most often mentioned by investors, therefore, together with hotels in the capital.
The report also noted that the other source of potential growth for international investors in Thailand is in the condominium market, especially in Bangkok, with sales to foreigners mushrooming in the last few years.
“This is providing scope for investments by foreign groups looking to sell their allocated portion of projects to buyers in their home countries. In 2016, around 80 percent of foreign purchases involved buyers in either Hong Kong or China.”
One investor also mentioned Thailand as a potential location of retirement communities for a well-heeled clientele.
The Emerging Trends in Real Estate report is in its 12th edition, and is one of the most highly regarded and widely read forecast reports in the real estate industry. It provides an outlook on real estate investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues throughout the Asia Pacific region.
The 2018 report reflects the views of individuals who completed surveys or were interviewed as a part of the research process for this report. ULI and PwC researchers personally interviewed more than 110 individuals and survey responses were received from almost 600 individuals, a mix of private property owners or developers, fund and investment managers, real estate advisory or service firms, homebuilder or residential developers, institutional equity investors and bank lenders and securitised lenders.