Reopening of Thailand’s borders to international tourists might help developers dispose of unsold Bangkok flats, analysts say
- Foreigners typically account for about 10 per cent of all home transactions in Thailand and Chinese buyers make up more than half of this foreign demand
- Chinese buyers were ‘the main driver for Bangkok flats before Covid-19’: Knight Frank executive
The full reopening of Thailand’s borders to foreigners is likely to help the struggling Bangkok flats market, analysts said.
Thailand began allowing in fully and partially vaccinated foreigners from February 1 and has proposed a travel bubble with China, which analysts said would help developers sell their inventory. China, along with Malaysia, was among the two largest sources of foreign tourists in Thailand before the coronavirus pandemic and jointly accounting for a third of the 40 million international visitors coming to Thailand in 2019.
“The border reopening would affect the [flat] market in a specific segment. The luxury and super luxury segments would benefit from the recovery of [foreign tourism] in Bangkok, resulting in increased buying or renting volume. The midscale to upscale segment in [several areas] would [also] benefit from the recovered demand from China as well,” said Palathip Chunhasomboon, manager, research and consultancy, research and valuations at Savills Thailand.
The reopening of borders is significant because foreigners typically accounted for about 10 per cent of all home transactions in Thailand. Chinese buyers made up more than half of that foreign demand, analysts said.
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In the last two years, launches have slowed to 20,000 units a year as developers looked to reduce their high inventory levels. As of the end of last year, 62,170 units remained unsold in Bangkok, a decrease of just 2.9 per cent from the 64,043 units available the previous year, according to Colliers.
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Since 2019, the Thai economy has also been struggling because of the strong local currency and a global slowdown, which dragged growth to its lowest in five years, dampening local spending. And the absence of foreigners since 2020, when its borders were closed to stem the spread of the coronavirus, has exacerbated the situation.
To reduce their inventories, Thai developers have been aggressively extending promotions, discounts and other marketing events to attract homebuyers.
In 2020, one company offered discounts of more than 10 per cent or some 11 million baht (US$335,500) for its most expensive property. Others offered gift vouchers that could be redeemed for hotel stays and dining at restaurants, and even free transfer fees.
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Several developers also offered to pay finance instalments for up to three years, while others enticed buyers with Hondas and Porsches with the purchase of luxury property.
Promotions available for homebuyers currently include a 40 per cent discount on units, according to Colliers. Other promotions include “Free Up Size” by Noble Development, which offers 33 square metre to 46 square metre units for the same price. Separately, Origin Property is waiving common area fees for seven years and transfer fees, along with up to 100,000 baht in cashback money, according to Savills.
This year, an estimated 24,000 to 27,000 units are expected to be completed following construction delays owing to the pandemic, according to Colliers.
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“The Chinese buyer market was the main driver for Bangkok flats before Covid-19,” said Christine Li, head of research, Asia-Pacific at Knight Frank. “We believe that more foreign visitors will also increase the rental market sentiment, which will be positive to investors who bought them for rental yield.”
Last year, Thailand welcomed 300,000 international visitors as part of a limited opening of its borders, and this had proved to be a “positive” for the flats market, said Phattarachai Taweewong, director, research at Colliers in Thailand.
