China‘s real estate sector transformation reflects urbanization trends, national policy shifts, and economic challenges with implications for Asia-Pacific economies.
The Evolution of China‘s Real Estate Sector
The transformation of China’s real estate sector over the years reflects the country’s rapid urbanization and broader shifts in the Asia Pacific region. The shift from a state-dominated model to a market-oriented approach highlights the intersection of national policy and global economic trends.
Policy Shifts and Urban Development
Key policy changes such as the 1998 ‘State Council’s Notice on Urban Housing System Reform’ and the 2021 ‘Three Red Lines’ policy have significantly influenced China‘s urban development. These policies, while well-intentioned, have also led to financial turmoil among leading real estate firms, showcasing the intricate relationship between regulations and market dynamics.
Impacts on Social Welfare and Financial Stability
The real estate market’s transparency issues and the surge in household debt raise concerns about social welfare and financial stability. Addressing these challenges requires comprehensive solutions like stricter mortgage regulations and mandatory disclosure norms to promote market stability within China and across Asia.
Future Outlook and Sustainable Development
As China navigates its real estate challenges, the focus must shift towards enhancing living standards and sustainable urban development. Diversifying the economic base, implementing property taxes, and fostering public-private partnerships are crucial for ensuring fiscal sustainability and market stability, laying the groundwork for a resilient economic framework.
PropertyGuru, Southeast Asia’s largest online property marketplace, reported a net profit of S$1.1 million in Q423 after it recovered from a $5m net loss in 4Q22.
The company’s revenue for the fourth quarter rose 3.5% year-on-year to US$30.9 million, mainly due to a strong recovery in its core market of Singapore.
The growth that the company experienced in the Singapore market was driven by higher demand for its agent services, project marketing, and mortgage marketplace products.
The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fourth quarter surged to US$6.6 million from US$374,000 in the same quarter a year ago, reflecting its improved operational efficiency and cost management.
For the full year of 2023, PropertyGuru’s revenue increased 10.5% year-on-year to US$111.6 million, while its net loss narrowed 88.2% year-on-year to US$11.4 million. Its adjusted EBITDA for the entire year rose 8% year-on-year to US$18.7 million.
PropertyGuru’s CEO and managing director, Hari Krishnan, explained that despite the company’s less favorable conditions in Vietnam and Malaysia, they got positive results in Singapore by focusing on optimizing costs, adopting internal process automation, and improving code quality and productivity.
The financial reporting from the company in the Singapore market highlights the positive work behind its strategy and operations in the country.
PropertyGuru operates online property platforms in Singapore, Malaysia, Indonesia, Thailand, and Vietnam. It also offers digital media, events, and awards services. The company claims to have over 37 million monthly property seekers and 2.8 million monthly active agents on its platforms.
PropertyGuru was founded in 2007 and is backed by investors such as TPG Capital, KKR, and REA Group. The company had planned to list on the Australian Securities Exchange in 2019 but withdrew its initial public offering due to market conditions.
In 2023, foreign nationals purchased 14,449 condominium units in Thailand, totaling 73.16 billion baht, marking a 25% increase in units sold and a 23.5% increase in condo value compared to the previous year.
Key Takeaways
Foreigners purchased a significant number of condominium units in 2023, with Chinese buyers leading the pack.
Myanmar buyers had the highest average price per unit, while Britons bought the largest rooms on average.
The property market in 2024 is expected to lean towards recovery, especially for high-end properties, but may face challenges due to stricter loan criteria and economic factors.
The top buyers were Chinese, followed by Russians, US citizens, and Myanmar nationals, with Myanmar buyers having the highest average unit price, the Government Housing Bank’s Real Estate Information Centre (REIC) reported.
The property market in 2024 is expected to show signs of recovery, but there are concerns about global economic slowdown and stricter loan criteria for properties priced under 3 million baht.
The director of the Real Estate Information Center (REIC) predicted increased demand for high-end properties priced over 10 million baht and emphasized the need for government support to maintain strong demand and buyer confidence.
The Thai residential market has been experiencing a slowdown in the first half of 2023, due to the prolonged impact of the COVID-19 pandemic and the political uncertainty.
According to the latest report by CBRE Thailand, the total number of new condominium units launched in Bangkok in H1 2023 was 17,859 units, a decrease of 35.6% year-on-year. The average take-up rate was 55.4%, the lowest level since 2009.
The demand for single-detached houses and townhouses also declined, as buyers became more cautious and selective amid the economic downturn and the rising household debt. The total number of new units launched in Bangkok and its vicinity in H1 2023 was 38,762 units, a drop of 24.4% year-on-year. The average take-up rate was 58.7%, down from 64.5% in H1 2022.
The market is expected to remain sluggish in the second half of 2023, unless there are significant improvements in the political stability. The developers are facing challenges such as rising land prices, higher construction costs, tighter lending regulations, and lower consumer confidence. Many projects have been delayed or postponed until the market recovers.
Higher interest rates and stricter criteria for approving loans
Unfavourable factors include higher interest rates, increases in expenses related to home purchase, and stricter criteria for approving loans.
To stimulate the market, the government has announced several measures, such as extending the tax incentives for home buyers and reducing the transfer fees and mortgage fees until the end of 2023. The Bank of Thailand has also eased some of the mortgage lending rules to help low-income and first-time buyers. However, these measures may not be enough to boost the market sentiment, as buyers are still waiting for more clarity on the economic outlook and the vaccine rollout.
Buyers from China and Hong Kong
The market may see some signs of recovery in 2024, if the pandemic is brought under control and the political situation stabilizes. The demand for residential properties may also increase from foreign buyers, especially from China and Hong Kong, who are looking for alternative destinations for investment and living. The government is considering to relax some of the foreign ownership restrictions and to grant longer visas for qualified foreigners.
The Thai residential market is going through a challenging period, but it may also offer some opportunities for buyers who are looking for bargains or long-term investments. The developers are also adapting to the changing market conditions by offering more flexible payment terms, discounts, freebies, and innovative products that cater to the new lifestyle trends and customer preferences.
CBRE Thailand expects that the residential market will continue to face challenges in the second half of 2023, and that developers will have to adjust their strategies to cope with the changing market conditions. The report suggests that developers should focus on product differentiation, pricing strategy, digital marketing, and customer relationship management to enhance their competitiveness and sales performance.
The report also noted that the demand for single-detached houses and townhouses remained resilient, as buyers preferred low-rise properties with more space and privacy. However, the supply of new low-rise projects was limited by the scarcity of land and the high land prices in Bangkok and its vicinity. The average selling price of single-detached houses and townhouses increased by 6% and 8% year-on-year, respectively.
Foreign buyers are expected to drive growth in Thailand’s property market in the second half of this year.
Key Takeaways
Foreign buyers are driving growth in Thailand’s property market, while domestic buyers are still facing challenges due to unfavorable factors.
The number of condominium transfers by foreigners in Thailand has significantly increased, reflecting a positive recovery trend in the real estate market.
The value of property units in Thailand is expected to increase in 2023, with foreign buyers predicted to account for a significant portion of total units sold.
The country has seen improvements in its economy thanks to foreign purchasing power and the reopening of China, but domestic buyers have not fully regained their purchasing power due to factors such as rising interest rates, inflation, and political uncertainties.
The number of condominium transfers by foreigners increased by 79.2% in the first quarter of 2023 compared to the same period last year. Foreign buyers typically have higher budgets than Thai buyers and prefer to live in main business districts.
Foreign buyers typically have higher budgets than Thai buyers, preferring to live in main business districts and along the banks of the Chao Phraya River. The Agency for Real Estate Affairs (AREA) predicts that foreign buyers will account for 15% of total property value or 10% of total units transferred, and purchases will increase to about 18% of total units sold in the next two years.
According to the Real Estate Information Center (REIC) of the Government Housing Bank, the number of condominium transfers by foreigners nationwide increased by 79.2% to 3,775 units in the first quarter of 2023 compared to the same period last year, and the value of these transfers increased by 67.6%. At the end of the first quarter, there had been 17.1 billion baht in transfers overall.
The number of condominiums in Thailand transferred to foreigners in the third quarter of 2023 increased by 0.4 percent, totaling 3,365 units. The value of these transfers amounted to 17,048 million baht, a 2 percent decrease compared to the previous period.
Key Takeaways
The number of condominiums transferred to foreigners in Thailand increased slightly in the third quarter of 2023, indicating a gradual return of foreign buyers.
Chinese nationals remain the leading nationality in terms of purchasing condominiums in Thailand, followed by Russians and Americans.
Chinese buyers accounted for nearly 47% of the total transactions
Chinese buyers accounted for 4,991 units, which is nearly 47% of the total transactions, with a total value of 24.7 billion baht, according to the Real Estate Information Center. Following behind were Russian buyers with 962 units, and United States and Taiwanese buyers in the third and fourth positions, respectively.
Chonburi surpasses Bangkok as the top sales location.
Chonburi Province has surpassed Bangkok as the location with the highest number of condominium ownership transfers by foreigners.
Approximately 42% of the condos were sold in Chon Buri province, which is home to Pattaya city and several industrial estates
Approximately 42% of the condos were sold in Chon Buri province, which is home to several beaches and industrial estates. Bangkok, Thailand’s capital city and a gateway for millions of tourists, accounted for 37.5% of the apartment sales to foreigners, the center reported.
Overall, for the first nine months of the year, there was a 37.6 percent increase in the number of units purchased by foreigners, totaling 10,703 units worth 52,259 million baht.
The demand for condominiums in Thailand remains strong, particularly in major provinces and tourist destinations. If tourism continues to expand, it is expected to lead to an increase in foreign buyers of housing.
Everyone must be heard about Phuket a beautiful island located in the Andaman Sea, in the south of Thailand.
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It is known for its stunning beaches, crystal-clear waters, warm climate, laid-back lifestyle, affordable cost of living, friendly people, and vibrant culture.
Phuket is a destination that offers something for everyone, whether you’re a nature lover, a food enthusiast, or a history buff. The island is surrounded by beautiful coral reefs, making it a haven for diving and snorkeling enthusiasts. You can explore the vibrant marine life and discover hidden underwater treasures.
Apart from its natural beauty, Phuket is also home to a rich cultural heritage. You can visit ancient temples like Wat Chalong and Big Buddha, where you can immerse yourself in the tranquil atmosphere and learn about the local customs and traditions.
If you’re looking to unwind and relax, Phuket has plenty of options for you. You can pamper yourself with a traditional Thai massage or indulge in a rejuvenating spa treatment. The island also offers a range of wellness retreats and yoga studios where you can nourish your mind, body, and soul.
For those seeking adventure, Phuket has an abundance of thrilling activities. You can go island hopping and explore the nearby Phi Phi Islands or take a scenic kayak tour through the famous limestone cliffs of Phang Nga Bay. Phuket truly is a destination that has it all. Whether you’re seeking relaxation, adventure, or a cultural experience, this stunning island will not disappoint.
But have you thought about living or investing there?
Phuket province is witnessing a surge in international tourists. Since tourism is coming back, it creates more job opportunities in Phuket as well, more people want to rent in Phuket as its reasonable price of accommodation and convenience for work every day. The price of condominiums has 5.25% average growth from 2011 to 2023.
It is time for you to invest in Phuket properties now
Ashton Hawks proudly brings you to The Origin Kathu Patong, located in the heart of the thriving district Kathu. The Origin Kathu Patong is the latest freehold low-rise luxurious condos, offering you a high standard of luxury living in the tropical paradise.
Highlights of The Origin Kathu Patong
Operating by Thailand’s ‘Space Magician’ property – Origin Property PCL
Price from HKD490K* | Est. Rental Yield of 8%* | HKD1,700 psf.
10 mins drive to the shopping mall and supermarkets – Blu Pearl Phuket, Lotus Phuket, Big C Phuket and The Central Phuket
10 mins drive to the golf club – Red Mountain Club
12 mins drive to the biggest waterpark – Andamanda Phuket
15 mins walk to Tessaban 2 Ban Kathu School and 15 mins drive to Songkla University
15 mins drive to Bangkok Siriroj Hospital and Bangkok Hospital Phuket
The Origin Kathu-Patong offers you a variety of private facilities such as a 70-meter long swimming pool, kids swimming pool, garden court, Jacuzzi, party area, activity lawn, clubhouse, 24/7 fitness gym, co-working space, rooftop gardens, sky lawn, and jogging track, etc.
In the coming future, Blu Pearl Phuket – A new shopping mall is now confirmed to come. Blu Pearl Phuket is planned and constructed under The Mall Group, one of the largest mall operators in Thailand with iconic shopping hotspots like the Emporium and Siam Paragon, etc.
What’s more important, the developer’s previous project — The Origin Centre Phuket has sold out within 6 weeks since it launched. It is competitive that there were another 5 condominiums that have been sold out in the Kathu zone, we believe the future profit return is fantastic.
Chinese real estate investors who were once the top buyers of high-end condos and apartments in Thailand are now cutting back due to an economic downturn and real estate crisis in China.
Key Takeaways
Chinese real estate investors, who were previously major players in Thailand’s luxury condo and apartment sector, are now reducing their investments due to economic downturn and real estate crisis in China.
Traditional English-speaking countries, like Australia, Canada, the U.K., and the U.S., have become more attractive to Chinese buyers for real estate investments, surpassing Thailand in popularity.
Vietnam, unlike Thailand, is less reliant on Chinese investors and has seen steady investment from Chinese buyers in apartments, particularly in major cities like Hanoi and Ho Chi Minh.
Thailand, which was previously the number one destination for Chinese buyers, has now dropped to fifth place, with Australia, Canada, the UK, and the US taking the top spots. Chinese buyers are now purchasing homes in Australia for their own use or to become new Australian citizens.
“This year, Thailand is no longer the number one destination for Chinese buyers like it was in earlier years,” Ansari said via email. “Instead, it is fifth, and the top four destinations are all the traditional English-speaking countries with prestigious educational sectors.”
Kashif Ansari, co-founder and CEO of Juwai IQI Group quoted by VOA
In recent years, Thailand has been a popular destination for Chinese investors looking to purchase residential properties. According to a report by a real estate firm, Thailand was the most desired country for Chinese buyers between 2018 and 2021. However, in 2022, Thailand dropped to fourth place and in the first half of 2023, it fell further to fifth place.
China’s economic problems, including high youth unemployment, declining exports, and a real estate crisis, have led to concerns about stagnation in its economic growth.
As a result, Chinese buyers are hesitating with investments in Thailand, and deals now take months to close. The long-term impact will depend on the actions of Chinese investors and how Southeast Asian states manage the fallout.
The rising interest rates in Bangkok have led to a decrease in affordability for housing, causing challenges for local buyers. The sales performance of the housing market has been affected, with a decrease in pre-sales rates.
Key Takeaways
Rising interest rates and housing affordability challenges are impacting Bangkok’s residential market, leading to a decrease in pre-sales rates and mortgage rejections for units priced under THB 5 million.
The rental market in Bangkok’s Central Business Area is strengthening, driven by spillovers from cautious buyers and the return of expatriates, indicating a potential shift towards rental properties as a short-term option for first-time buyers.
The rental housing market in Bangkok is set to evolve, with factors such as changing buyer behavior, a growing urban population, the expatriate community, and worsening housing affordability creating investment opportunities and driving demand for rental properties.
The increase in borrowing costs and inflation has adversely affected the purchasing power of consumers. The local buyers are concerned about the affordability of housing as the housing prices have surpassed the household income. Due to this, many buyers have faced difficulties and have been unable to find suitable options within their budget, leading them to drop out of the housing market entirely.
APAC Housing Affordability
Source: ULI & JLL Research (2022) Note: Median/Average Apartment Price to Median Annual Household Income
As economic headwinds loom, the affordability problem affected the sales performance of low-to-high market segments, where most buyers rely heavily on a mortgage. This has resulted in a decrease in the pre-sales rate up to -12%.
Even though we saw an increase in pre-sale rates in the mid-low segment in 2Q23, the mortgage rejection rose in parallel to a concerning rate estimated at 50-60% for units priced under THB 5 million. Meanwhile, demand from foreign buyers – mainly driven by Chinese investors – is still gloomy but climbing back to the pre-pandemic level.
Despite these challenges, activities in the rental market strengthened as investment-grade apartments in Bangkok’s Central Business Area (CBA) recorded a 2.5% q-o-q increase in 3Q23, driven by spillovers from buyers adopting a wait-and-see approach and the return of expatriates.
This also suggested that rental properties could potentially be the short-term option for first-time buyers, who either cannot access a mortgage or are more inclined to rent.The question is, whether this will trend turn into a longer-term phenomenon?
From the perspective of developers and investors, it is anticipated that several key factors will play a vital role in driving the rental housing market and subsequently provide investment opportunities to capture this growing pool of demand. These factors include: a paradigm shift in behaviour and mobility of Gen-Z and Gen Alpha buyers, structural tailwinds of a growing urban population, growth of expatriate community, and most importantly, an exacerbating housing affordability.
In many markets across APAC, the living sector has proven to be one of the most active and sought-after asset classes. In 1H23, JLL recorded a substantial allocation of capital into the multifamily sector against a 24% decline in total APAC investment volume. While the multifamily market is becoming more established in first-tier cities like Japan, PRC and Australia, Bangkok’s rental housing market – where perpetual ownership has always been the norm – is still in its infancy and set to evolve.
Non-serviced apartment stock in Bangkok CBA stood at approximately 10,900 units in 2Q23 – roughly 55% built before 1997. Only 16.8% or 1,832 units are classified…
BANGKOK (NNT) – Thailand has reinstated its 30-day visa exemption policy for tourists from roughly 60 countries, effective April 1, 2023, marking a reversal of a previous regulation that allowed visitors from these countries to stay up to 45 days without obtaining a prior visa.
Tourists from mainland Europe, the UK, the US, Australia, Saudi Arabia and other countries will now only be granted a 30-day stay in Thailand if they choose to enter the kingdom without obtaining a prior visa.
30-day visa exemption reinstated
According to the Tourism Authority of Thailand (TAT), visa-exempt visitors will still have the option to extend their stay once for an additional 30 days if they go through immigration, allowing them to travel the nation for a maximum of 60 days.
Visa-exempt countries will also have another option to obtain a 30-day extension by briefly leaving and re-entering the country. However, land border crossings can only happen twice per calendar year. While there are no official restrictions on entry by air, immigration officers have the discretion to refuse tourists entry and require them to obtain a formal visa from a Thai embassy beforehand.
Visa-on-arrival back to 15 days
Additionally, the visa-on-arrival period, which had been extended from 15 to 30 days, has now reverted back to 15 days for countries considered visas on arrival.
The TAT reportedly plans to approach the new government after the general election to potentially revise the visa program again to attract more tourists.
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