Boom to bust: Chinese investment in Thai property hits rock bottom
Once a beacon of opportunity, Thailand’s vibrant condo market for Chinese investors is now dimming, as economic clouds gather over China’s middle class.
Stephen Yao, a former Chinese investments broker in Bangkok, and Pattaya, has seen his formerly bustling schedule dwindle. In 2017 and 2018, he made a staggering 32 trips from China’s Guangdong province to Thailand. But recent years have painted a starkly different picture.
Once riding high on the wave of China’s booming economy, Chinese middle-class investors eagerly snapped up real estate in Thailand, Vietnam, Malaysia, and Japan, seeking diversification and fresh experiences abroad. However, as Yao notes, the fallout from a sluggish economic recovery, shrinking household wealth and a prolonged domestic real estate slump has left many floundering.
“The investment landscape has changed dramatically.”
Yao added that many property agents have now pivoted to different careers. As unemployment rises and domestic mortgage pressures mount, overseas investments offer no lifeline, reported Bangkok Post.
Investors are grappling with stagnant returns and properties likened to “sunk costs,” tied up in assets that are increasingly difficult to sell.
For some, legal avenues have allowed them to retrieve about half their investment value; others rely on domestic loans. Meanwhile, those clinging to their Thai condos face dwindling hope for asset appreciation.
The market for foreigners’ second homes in Thailand remains narrow, compounded by a downturn in Chinese tourism, a vital revenue stream now curtailed by fewer visitors and soaring costs.
Zhu Maowen, a writer from Haikou who invested in Bangkok real estate, confirms the trend.
“Second-hand property values in Thailand haven’t seen notable growth. Even if rental yields reach 5%, maintenance costs exceed expectations.”
This shift has prompted Yao to explore new horizons, now aiming to assist Chinese building material brands in penetrating the Thai market, said Zhu.
“The hard truth is that the game has changed, and adaptation is key.”
Asia property
It’s not just Thailand feeling the heat. Investments in Vietnam have cooled considerably. Frankie Wang, a property salesman promoting properties in Ho Chi Minh City, laments the downturn.
“Once-promising markets have become harder to sell to Chinese investors, who now lack the boldness and capital they once had.”
Japan offers a slightly brighter picture. Tokyo’s rental market remains steady, although short-term B&B bans pose challenges.
Tina Chen, a Japan-focused property consultant, notes that while rental stability is positive, “the yen’s depreciation takes a bite when returns are converted to yuan.”
Over in Malaysia, Emma Jian’s experience reflects broader sentiments after buying property there in 2017.
“Prices have risen from recent lows but remain under my initial purchase cost of 20,000 yuan per square metre.”
Challenging investment
Abandoning hopes of a quick sale, Jian has opted to use the property as a holiday home.
China’s economic slowdown has sent ripples through these once-lucrative markets, rendering the prospect of foreign real estate investment starkly challenging.
As Chinese investors reassess fiscal fortitudes and market dynamics, what was once a land of opportunity now calls for caution and tempered expectations.
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