The impact of the COVID pandemic has rippled across the globe and impacted most forms of economic activity. Even the property market has not been spared from it.
Before this, the Thailand residential property market had always been a top investment destination favored by Asian investors, mainly Chinese, Hong Kong, and Singaporean buyers.
“Foreign buyers consider Thailand an attractive investment destination that offers a high-quality lifestyle. They believe the EEC and high-speed rail will help contribute to real estate price growth in the coming years. More importantly, they believe that the Thai property market will rebound spectacularly when mass tourism resumes and bring greater numbers of offshore buyers eager to make up for a lost time,” as quoted in the Bangkok Post.
It is therefore unsurprising that Thailand remained the most searched property market by Chinese buyers even in 2020.
Investors are using the downturn to score luxury assets that are of good value
The travel restrictions have resulted in an exodus in visitor numbers and foreign investor activity. Yet, it is undeniable that every down cycle presents an opportunity.
Buyers committed to deals during the pandemic have benefitted from the high discounts and promotions offered in many projects. Under the Thailand Elite Card scheme, many foreign buyers have also secured long-term residency visas in exchange for property investment.
The luxury segment has benefitted from this, most evidently through an uptick in demand and an exceptionally high volume of inquiries for that segment. Aliwassa Pathnadabutr, managing director of CBRE Thailand, commented, “The luxury housing market has been one of the fastest segments to recover as Thailand’s lockdown restrictions ease. Our ongoing luxury housing projects sales have also achieved better rates than the pre-COVID 19 periods because developers are also offering more discounts.”
Confidence in Thailand’s long-term property market remains bullish
Prices of Thailand’s real estate are still considerably more affordable than many of the other real estate markets in Asia and the country is perceived to be friendly towards foreign investment.
49% of units in condos located in selected areas is made available for foreigners to buy and there have even been talks of further increasing it. Foreigners also do not have to pay additional property tax, unlike most countries.
Besides the attractive tax structure for foreign buyers, it is also relatively easy for foreigners to sell their Thai home, be it to a local or to another foreigner.
There is no restriction, no seller stamp duty or any minimum investment period which is another reason so many property investors favour Thailand compared to other alternative property markets.
Recovery on the horizon following success in containing COVID
Thailand’s response to COVID-19 has been swift, sharp, and responsive. By closing its borders early at the onset of the pandemic, it has managed to contain the spread of the virus. The government has also been fast to respond to any sign of a potential outbreak, including with recent spikes in cases.
Before that, there have been talks of opening the country’s border to neighboring countries and those with close ties to Thailand, such as Singapore, Hong Kong, South Korea, and even Japan, to kick start the economy.
For now, Thailand continues to rank as one of the best-placed countries to recover from the pandemic in Asia.
Attractive rental yield fueled by tourism bounce back
Tourism has been a major engine for Thailand’s economic growth. Since 2011, Chinese tourists have been the largest demographic group to visit and invest in Thailand.
We also saw hundreds of Chinese apply for Thailand’s newly introduced special tourist visas, after it was rolled out in October 2020.
Under the new visa, tourists from low-risk countries were allowed to enter Thailand for long stays up to 270 days. The visas are designed to incentivize and foreigners to visit Thailand.
With countries around the world gradually opening their borders, analysts expect an upward of 4% on rental yield for condominiums in central Bangkok, driven by the amount of tourism the city receives.