WHEN CHINA’S government in 2015 encouraged its people to expand their investments in Thailand and other overseas countries, Chinese investors responded.
Thailand was one of the largest beneficiaries of both individual and corporate investment from China.
According to Siam Commercial Bank IEC research, Chinese investors expand their property market investments outside of Mainland China to over Bt1 trillion in the year 2015, up 82 per cent from 2012 in which Bt170 billion of investment was recorded.
The top three countries benefiting from Chinese property investors were the US, Australia and the UK, according to Knight Frank Research.
In Thailand that first year, Chinese invested only 0.2 per cent of their total their overseas investment. Over the years, their top five locations for investing in Thai property projects became Bangkok, Chonburi, Chiang Mai, Phuket and Surat Thani province.
The latest survey by Juwai.com, a website for trade property in China, said that Thailand ranks fourth among property bought by Chinese investors. In 2018, their investment value in the Kingdom’s property market was recorded at US$2.3 billion (about Bt73.6 billion) for about 15,000 condominium units.
The US is the first-choice country for Chinese property market investors looking to expand their holdings, at a value of $30.4 billion (about Bt974.8 billion), followed by Hong Kong at $16.2 billion (Bt518.4 billion), and Australia at $14.1 billion (Bt451.2 billion).
Meanwhile, Malaysia ranks fifth, attracting Chinese investment in the property worth $2 billion (about Bt64 billion) in the year 2018.
Their investment in Thailand has shown a return averaging 6 to 10 per cent when condominium units are opened for rental, according to CBRE reports.
Most Chinese purchases invest in condo units for rental, rather than moving in themselves, preferring the business opportunity to generate rental income from their investment, says a property expert.
The market trend is for property management for rental, which provides entry to the Thailand property market by supporting the demand from investors who need to generate income from their asset.
Seeing a business opportunity, startup firm Hostmaker, an award-winning home rentals management company from Europe, set up shop in Thailand in November 2018.
“We established our business in Thailand three months ago, and have grown to managing 120 condominium units in Bangkok, such as along Sukhumvit, Phayathai, Ratchathevee, and Mochit. They are opening for a rental start within 30 days through six months, depending on the customer’s demand,” Hostmaker Thailand’s assistant general manager Paruethai Panjaboon said in a recent interview with The Nation.
The company has had success in already providing a return of investment for its customers of up to 20 per cent, more than the market average income, within their 3-month launch in Thailand. The key factors include the increasing numbers of expats looking for mid-term rent accommodations (1-3 months) as well as the change in travel lifestyles that demand more flexibility, convenience, and the one-stop service that can be found within Hostmaker’s core services.
The demand for rental averages between one and three months, mainly comes from people doing business in Thailand or other Asean countries. They need residential for a mid-term rental rather than staying in a hotel. Most of them are from European countries, she said.
“Our business matches the demand between condominium owners and renters. They need a high return and a reasonable price to do business, respectively. Now, the number of condominium for rent is rising as the demand for mid-term rental is also rising,” she said.
With the demand for rent experiencing strong market growth, the company plans to increase the number of rooms under their management from the current 120 to reach 400 units this year by focusing on Bangkok locations, she said.
The key to success in renting residential properties is not just about the location, but also the optimal unit size, maximising the utility of the space and providing a high standard of finishing, furnishing, facilities and appliances, Paruethai said.
For the Thai real-estate industry today, though, there is an oversupply of properties that does not balance with the demand, especially in Bangkok. However, as today’s sharing economy trends continue to grow, this will provide the industry with opportunities – as will growing numbers of visitors to Thailand.
Thus, Hostmaker is confident they have a future supporting hosts in Thailand while also fulfilling the needs of guests, Paruethai added.