THE influx of foreign funds particularly from China into the property sector has caused concern in many countries including Thailand prompting some countries to ban foreign ownership of their property.
Property experts here are worried that such influx could cause problems in Thailand in the long run.
Prasert Taedullayasatit, Chief Executive Officer of Pruksa Real Estate Premium, said there is a drastic change in the property development scene in Thailand as recently massive foreign funds have been moved to set up 34 joint venture property firms in Thailand to invest in condos, townhouses, houses, with projects being worth 618,000 million baht. Of these 19 are companies from China and Hong Kong investing over 334,000 million baht.
“Of course their main clients would be the Chinese. So it’s a matter of concern as to how they would live together with others. The hidden debts of these joint venture firms may also be a problem in the future,” he said, adding that he has never seen this phenomenon in his 25 years in this business.
The move to park money abroad by Chinese investors drove around $100 billion in property purchases outside China in 2016, according to Juwai.com, a Chinese real-estate website. The buying frenzy, which grew from $5 billion in 2010, helped swell prices for housing and commercial real estate in major cities in various part of the world and Bangkok included.
Chinese investors have scooped up homes, condos, apartments and shophouses from Vancouver to Auckland to Sydney and to Bangkok. This has caused government in many countries trying to control such influx, the latest move being made in New Zealand.
New Zealand’s government has just announced a plan to ban foreigners from buying homes to cool its red-hot housing market.
The Labor party came to power on promises to make houses more affordable and restrict access to foreign buyers snapping up properties for investment purposes. Data shows in the first quarter of 2018, in some of New Zealand’s priciest areas, namely the suburbs around Auckland, there has been a big jump in foreign buyers.
Across Auckland, 7.3% of buyers weren’t New Zealand residents or citizens, up from 4.1% a year earlier. Of all property transfers, the largest share of foreign buyers come from China.
Actually for Chinese citizens, it is illegal for them to move money out of the country to buy property but there is always a way of getting past the rule. China introduced tighter capital controls in late 2016 in an attempt to halt the depreciation of the yuan.
Chinese households spent about $40 billion on residential property overseas in 2017, according to Juwai.com, one of the country’s biggest international property platforms.
In Thailand, the trend is obvious as more Chinese are coming in to stay longer in Bangkok creating their own business especially in the Huay Khwang area, where it’s also known as the new capital of the Chinese.
During lunch and dinner time, Thais going to food courts at Siam Paragon and Central Rama 9 might feel that they are now in China as lots of Chinese are visiting these places every day.
These shopping malls now put more emphasis to catering to both the local and foreign shoppers as they recognize the vital role of Chinese shoppers.
A source at a shopping mall said Chinese tourists are the most important group and contribute 20 per cent of total sales. They are the number one tourists in Thailand.
A separate survey by the Institute of Asian Studies’ Asian Research Center for Migration at Chulalongkorn University found many new Chinese migrants bring significant funds to invest in start-ups in Bangkok, reported Bangkok Post.
The survey of 119 Chinese migrants living in Huay Khwang for over a year found that 68.9% had a bachelor’s degree. For 97.5% it was the first time they had migrated outside China.
About 74.8% came for employment such as white collar jobs, Chinese-language teachers and tour guides, while 21% came for study and 4.2% to accompany their family. However, they intend to return to China once they have derived “enough economic benefit,” researchers Supang Chantavanich and Chada Triamvithaya found.
As a result, many new China towns are forming across Bangkok, including Huay Khwang where the Chinese Embassy is located. Features of these communities are increasing numbers of Yunnan cuisine restaurants, southern Chinese style confectionery, Chinese beauty salons and retail shops.
Many apartments are increasingly occupied by Chinese, Ms Chada said, adding that while it was difficult to determine how much money the latest wave of Chinese migrants had bought in, they had quantified the growth of Chinese business in Huay Khwang.
In shipping and logistics, there were 30 Chinese operators, while there were 14 restaurants and 18-20 beauty product shops, Ms Chada said. When they inquired as to the owner of the businesses, some replied that it was a joint Chinese-Thai venture. However, the researchers interviewed local officials who suspected that some of the businesses were 100% Chinese owned and operated.
Top: Stunning Bangkok skyline at sunset. Photo: Swaminathan (CC-BY-2.0)
First in-text: A vendor selling chestnuts in Yaowarat. Photo: Shankar s. (CC-BY-SA-2.0)
Second in-text: Siam Paragon shopping center decorated for the Christmas and New Year holidays. Photo: Mark Fischer (CC-BY-SA-2.0)
Below: Lighting bolts above Bangkok. Photo: Mike Behnken (CC-BY-2.0)
By Kowit Sanandang