Despite political crisis, increasing interest in vacation homes
Developers of luxury residential projects have benefited from the current weakness of the baht, with foreign buyers expanding their investment to buy a vacation home in the Kingdom despite the ongoing political turmoil, according to property experts.
Aliwasa Pattanthabutr, managing director of property agency CB Richard Ellis (Thailand), said that whereas the prolonged political situation had deterred some foreign interest in Thai properties, the depreciation of the baht against major currencies had help trigger demand from foreign buyers wanting to buy luxury condominium units – as they can buy Thai properties today at lower prices.
“Most foreign buyers looking to buy properties in the region have a fixed budget to spend. With the baht declining, they can buy more expensive properties. In Phuket, we have recently been able to sell more expensive units in projects we represent,” she said.
Foreign buyers of luxury residences costing more than Bt20 million now get much better value for money than they did last year, as the baht has fallen from 29-30 per US dollar to between 32.75 and 32.90 at the present time – a weakening of up to 9 per cent so far this year, she explained.
And this of course applies to foreign purchasers of luxury detached houses and townhouses as well as condominiums, she added.
Sorapoj Techakraisri, CEO of PACE Development Corp, which is developing the Bt16-billion MahaNakhon luxury condominium project in Bangkok, said the political uncertainty was having less of an impact on luxury-market demand than on other segments, due to the baht’s recent depreciation.
The current exchange rate against the US dollar meant that foreign investors were now able to buy virtually 10 per cent more space at this time, should they wish to do so.
“Customers who delayed their decision to buy early last year have decided to buy at this time and pay by cash, because they believe that they have got much better value for their money compared with last year,” he said.
Foreign investors snapping up luxury residences in Bangkok and the provinces are largely from Asia, Europe – mainly Scandinavia – and the US, with many of them convinced Thailand will be the gateway for them to expand their regional investment when the Asean Economic Community comes into effect next year, said Sorapoj.
This is because Thailand is geographically at the centre of the region, he added.
“Political turmoil has had less impact on demand for luxury homes, which remains strong – as well as exceeding supply,” said the CEO.
The weakening of the baht has made decision-making easier for foreign customers looking to buy a home in Thailand, said James Duan, chief executive of property developer Fragrant Group.
Many parties may take the view that the prolonged political problems and the state of emergency will alarm foreigners, or that violence will multiply, so foreigners will choose to postpone their investments or take their investment funds out of Thailand, he said.
However, Fragrant Group has seen the opposite effect, thanks to the steadily weakening value of the baht that has made purchasing decisions easier for some customers.
Foreign investors have bolstered and stabilised the developer’s sales, he added.
The political situation has not dented the company’s performance, because its main customer base consists of foreigners.
For its last project, the company was able to sell out its foreign quota. Sales are averaging eight to 10 units a week, said the chief executive.