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International Property

Young Hong Kong homebuyers bank on Bangkok property with eye on future purchases at home

  • The Thai capital is the most popular investment destination among Hong Kong and mainland Chinese buyers, according to experts
PUBLISHED : Tuesday, 27 November, 2018, 8:00am
UPDATED : Tuesday, 27 November, 2018, 7:48pm

Hong Kong millennials, who have been priced out in the world’s most expensive property market at home, are increasingly investing in destinations like Bangkok in Thailand, where real estate prices stand at just about a fifth of those in the special administrative region.

Home prices in Hong Kong, which rose for 28 consecutive months, have fallen by 4 per cent over the past eight weeks, according to the Centa-City Leading Index, a gauge of the city’s secondary housing market. Hongkongers, however, still need to save their entire incomes for 19 and a half years before they can afford to buy a home in the city, according to a report published by market research company Demographia this year.

Moody’s sees Hong Kong home prices tumbling … half of Hongkongers agree

Homebuyers in Sydney and Vancouver will need to save their entire incomes for 12.9 and 12.6 years, respectively, according to the report.

“There is no way for me to buy a home in Hong Kong, even with home prices starting to ease,” said Calvin Chan, 35, an event planner.

Chan bought a 25 square metre (about 270 sq ft) apartment in Bangkok for HK$580,000 (US$74,111), in a new condominium project near a subway station, in June without even viewing the project. “With this budget, no way you can buy a unit in Hong Kong,” he said. In Hong Kong, a 162 sq ft apartment at The Esplanade in Tuen Mun is going for HK$3.09 million.

The 1,320-unit Metro Sky Prachachuen, in which 15 per cent of units have been sold to buyers from Hong Kong, will be located close to the planned Bang Sue Grand Station, which will also be the terminal for the high-speed train connecting Kunming in China’s southern Yunnan province with Bangkok, via Laos.

“My friends are also buying their first homes in Bangkok for investment, and are betting that home prices will be boosted by infrastructure development. If we are lucky enough to make a profit on this investment, we can buy an apartment in Hong Kong later,” said Chan.

Keith Wong, head of project development at Queens International Real Estate, which focuses on selling properties in Southeast Asia, said Bangkok was the most popular investment destination among Hong Kong and mainland Chinese buyers.

If we are lucky enough to make a profit on this investment [in Bangkok], we can buy an apartment in Hong Kong later
Calvin Chan, event planner

“We are offering more than 20 Thai properties largely in Bangkok and Pattaya. Every month, we sell more than 100 units,” he said.

Most of these flats cost between HK$600,000 and HK$800,000 each, and are bought by buyers between the ages of 28 and 35 for investment purposes, he said. “As the entry barrier is low, in some cases three or four friends who are maybe 20 years old sometimes come together to buy an apartment for investment,” said Wong.

Carrie Law, chief executive and director of Juwai.com, the largest Chinese international real estate search engine, said about 15,000 new Bangkok apartments will be sold to buyers from mainland China and Hong Kong this year, accounting for about half of all foreign purchases. “If mainland and Hong Kong buyers purchase units at an average price of about 5 million baht (US$151,585), that works out to a total investment this year of 30 billion baht to 75 billion baht,” she said.

But Law added that tight capital controls in China had limited the amount some Chinese buyers could spend.

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According to Juwai.com, enquiries for Thai properties, the top destination in Asia, from Chinese buyers had reached a new peak for the three months ending in September. “They favour Thailand because Thai property is within the reach of families that might find it difficult to move enough money to purchase in a higher priced market, such as Australia. In Thailand, new, affordable luxury apartments start in the US$100,000s,” said Law.

Hong Kong developer HKR, which owns Discovery Bay, has accelerated its expansion in Bangkok. It plans to build a 1,400-unit residential project on a site by the Chao Phraya River, it said in a written reply to the South China Morning Post.

In February this year, it bought another three adjoining plots on Bangkok’s Ramintra Road in the Khannayao District.

“We have been in the Thailand market for nearly 30 years, operating property development and hospitality businesses. We feel positive about Thailand’s future development, and together with its expanding infrastructure, there are a lot of opportunities in the market. Its relatively high flexibility in design and development is also attractive for many developers,” HKR said in a statement.

Chinese investors turn to property markets in Southeast Asia, as western markets impose capital curbs

Global commercial real estate services company CBRE, however, said growth in the prices of condos will slow down in 2019. “We start to see the slowdown of new launches due to oversupply in some locations. Since we are approaching an election in the first quarter of 2019, investors will adopt a ‘wait and see’ attitude and developers may delay new launches to after the second quarter,” said Aliwassa Pathnadabutr, the managing director of CBRE Thailand.

It was also too early to tell whether the Bang Sue Grand Station, which will be completed in 2020 according to the government, will drive demand for housing projects, she said.

Andrew Gulbrandson, head of Thailand research at JLL, said the station itself was two years away from completion. “The actual high speed rail lines are at least five years out. We anticipate only a limited impact on buyer demand in the short term,” he added.

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