Bangkok Condo Market: Around 50% of the foreign buyers of condos in the city are Chinese
Despite China's tight controls over capital outflows that limit Chinese individuals to exporting the equivalent of $50,000 a year, buyers from mainland China have now become the top source of foreign demand for condominiums in Bangkok.
Around 50% of the foreign buyers of condos in the city are Chinese, based on condo sales concluded and enquiries received so far this year by property services firm JLL.
According to JLL, many Chinese buyers of condos in Bangkok are expatriates working in the city. This is well in line with the firm's recent report, China12: China's Cities Go Global, which indicates that Bangkok is the 10th most popular destination in the world for mainland firms expanding overseas, and ranks third in terms of the volume of Chinese corporate leasing activity over the last three years.
Nonraphat Pornsinkunanon, head of residential sales and leasing at JLL, says: "Condos that are selling well to the Chinese expatriates are studios and one-bedroom units in the Ratchadaphisek and Rama 9 areas, priced between 1.5 million and 3 million baht.
Generally, these Chinese buyers have no issue with China's capital controls. In addition, some international banks and local financial institutions in Thailand offer home loans to foreigners that meet their qualification criteria such as the validity period of a work permit held and length of the employment contract in Thailand. These qualification criteria vary from bank to bank.
There are also many mainland Chinese buyers who have purchased condos in Thailand's capital city as an investment or a holiday home.
This trend is well supported by Bangkok's strong position as one of the Chinese's most popular tourist destinations, and JLL's report where Bangkok is listed among the world's top 10 cities most connected with China in terms of capital, corporates, people, infrastructure and trade.
While most buyers from mainland China have purchased condos priced at around 6 million baht in the Sukhumvit area, there is a growing number of Chinese ultrahigh-net-worth individuals who have purchased luxury and ultraluxury condos in Bangkok's central business and riverside areas.
"Some of these buyers are collectors of trophy assets -- something that they can be proud of," Ms Nonraphat says.
"Though the Chinese capital curbs are a big barrier for mainland Chinese purchasing property overseas, there remain a few ways to get around the restrictions. For example, some Chinese buyers have used offshore financing to fund their condo purchases in Bangkok," she adds.
According to JLL's Thailand Property Intelligence Centre, the total stock of condominiums in Bangkok stood at 524,000 units at the end of the first quarter of 2018. Of this, 46,000 units are in the prime segment.
The market-wide average first-hand sale price for condos in Bangkok saw a year-on-year increase of 8.3% in the first quarter of 2018. Prices in the prime segment across Bangkok grew marginally by 0.4% over the same period as many developers have moved upmarket over the last few years, exerting downward pressure on prices.
The first quarter of the year saw both the most expensive land deal ever (on a per-square-metre basis) and the largest (total price) deal ever.
SC Asset Plc reportedly acquired a development site on Langsuan Road for 3.1 million baht per square wah while a joint venture between Central Group and Hong Kong Land acquired the site of the current UK Embassy for 18.7 billion baht.
A number of other smaller or less expensive prime sites were acquired in the quarter by leading condo developers -- Raimon Land, MQDC, and Ananda Development.
JLL expects developers to launch new condo development projects on most of these sites, and some of these projects may achieve headline-grabbing prices.