2007 Property Investment Activity in Thailand

Thailand is a favourite emerging market of ours; it has just so much potential in terms of its undeniable appeal for tourists and travellers and also it has increasing appeal as a low cost destination offering residents a high standard of living - so much so that in the near future it could well expand its fledgling appeal for international retirees. 

However there’s a wealth of investment restriction in place that limits the appeal of Thailand for property investors, and in 2007 property investment activity in Thailand is likely to reflect this and be relatively subdued unfortunately.

Simply put, Thailand’s economy is vulnerable to the manipulation by the Chinese of their currency which is currently ongoing.  An example of Thailand’s direct vulnerability was seen towards the end of 2006 when the Bank of Thailand was forced to bring in strict investment controls to restrict the rise in the value of the Thai currency to allow Thailand’s exporters to have a chance of remaining competitive in the face of the Chinese activity. 

While these investment controls are not directly related to the real estate market in Thailand, overall investment confidence in the nation dropped dramatically throughout December 2006, and going in to 2007 investment activity is likely to be very reticent.

Investors are just not confident enough that money they commit to Thailand will be easily extracted from the nation further down the line - and for a property investor this translates to direct concerns over whether they will be able to release accrued profits from property sales or draw an income from rented or leased property in Thailand.  And while this lack of confidence abounds, the Thai real estate market will remain under explored.

On top of this property investor diffidence is the fact that Thailand is keeping in place its tight controls on the foreign freehold ownership of real estate that make it hard for an investor to own multiple properties and even harder to own the land on which those properties are sited.  There are of course ways around the restrictions such as the use of a Thai SPV, (a special purpose company vehicle), but for a smaller, one time investor the hassle associated with the establishment and maintenance of such a structure is just not seen as being worth it.  All of these negative factors are restricting the appeal of property investment in Thailand.

But all is not lost!  To offset the excessive negativity associated with property in Thailand and the fact that it is not an attractive investment commodity, representatives of the local real estate industry are beginning to take it upon themselves to positively promote the merits and virtues of owning property in Thailand.  Their efforts should pay off over the medium to long term suggesting that those willing to take on emerging market risk today could benefit greatly from a maturing market in five to ten years time.

In 2006 the Thai property industry held their very own Thailand Property Awards to spotlight the industry, raise awareness of new projects, good developers and the best people associated with the property industry to assist buyers, investors, developers and even agents.  The awards were also used to raise money for charity as well as awareness of the property industry in Thailand and as a result they received fantastic international media coverage bringing again to the table the debate among investors over whether or not the time is right to commit to Thailand property.

In terms of the risks and rewards an investor faces in Thailand, the risks are not associated with the stability of the nation politically or economically, nor are they related in any way to the appeal of Thailand which, let’s face it is huge and timeless, they are associated with the fact that the Thai government are anti speculation meaning that short term profitability is not likely to be gained easily in Thailand.  But an investor wanting an asset that could well bring long term growth and income from a consistently interested client base (either in the form of tourism rentals or even commercial leases) could do very well from careful entry into Thailand’s property market.  We believe there is much to be gained from property in Thailand over the long term but would warn an investor that this is not a market for short term focus nor is it a market for amateurs.

Special Reports: Property News for Thailand

Thailand Property Buying Guide for Foreigners
The amount of restrictions that apply to foreign property investors in Thailand makes the whole property buying process complicated

Thailand Property Investment Potential
Potential for property investors in Thailand is in abundance but dependent on the success of the tourism industry

Thailand: A Guide for Property Investors
The profitability of investment property in Thailand has increased significantly in recent years making Thailand real estate highly desirable.