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Foreign Demand Surge in Thai Condo Market Raises Sustainability Concerns

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Foreign buyers from China and Russia drive Thai condo sales 25% above pre-Covid levels, amidst visa waivers and geopolitical tensions.

By Athena Xu

4/4, 05:52 EDT
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Key Takeaway

  • Foreign buyers, mainly from China and Russia, drove Thai condo sales up 25% to $2 billion in 2023, surpassing pre-Covid levels.
  • Geopolitical tensions and visa waivers significantly influence market dynamics, introducing uncertainty into future growth.
  • Market concentration in Chonburi and Bangkok, along with heavy reliance on tourism for economic growth, poses risks to sustainability.

Foreign Demand Surges

The Thai condominium market has witnessed a significant influx of foreign buyers, predominantly from China and Russia, marking a notable shift in the property landscape. According to the Real Estate Information Center, managed by the state-owned Government Housing Bank, a total of 14,449 units worth 73.2 billion baht ($2 billion) were sold in 2023, representing a 25% increase from the previous year. This surge in sales has been attributed to visa waivers and geopolitical conflicts, raising questions about the sustainability and long-term implications of such demand-driven growth.

Geopolitical Tensions Influence Market

The geopolitical landscape has played a pivotal role in shaping the dynamics of Thailand's condominium market. The ongoing war in Ukraine and political unrest in Myanmar have been cited as contributing factors to the increased property demand from Russian and Myanmar buyers, respectively. While these circumstances have temporarily boosted sales, they introduce a layer of uncertainty and volatility to the market, dependent on external factors beyond Thailand's control.

Visa Waivers: A Double-Edged Sword

Thailand's temporary visa waivers for tourists from China and some other countries, along with a permanent bilateral waiver with Beijing, have undoubtedly accelerated condominium sales to foreign nationals. However, this reliance on policy measures to stimulate demand may not be a foolproof strategy in the long run. The temporary nature of these waivers and the potential for policy reversals pose risks to the sustained growth of the condominium market.

Concentrated Sales Raise Concerns

The concentration of condominium sales in specific regions and to a particular demographic of buyers raises concerns about market saturation and uneven development. Approximately 41% of the condos were sold in Chonburi province, with Bangkok accounting for another 38%. This geographic concentration, coupled with the dominance of Chinese buyers who snapped up almost 46% of the total units sold, highlights a potential over-reliance on a limited market segment, which could lead to vulnerabilities in the face of shifting economic or political winds.

Economic Dependence on Tourism

Prime Minister Srettha Thavisin's emphasis on tourism as a driver of economic growth underscores Thailand's dependence on this sector, which accounts for about 12% of the gross domestic product and nearly a fifth of jobs. While the expected recovery to 35-40 million visitors this year is optimistic, the reliance on tourism and, by extension, the property market linked to foreign buyers, underscores a fragile economic foundation susceptible to global economic shifts and travel trends.