Crisis at home hits Chinese property investors abroad

Thai real estate sector bears the brunt of the slowdown amid China’s economic fallout

Chinese real estate investors who once snapped up high-end condos and apartments in Thailand are cutting back due to an economic downturn and property crisis at home.

Many Chinese invest as much as 70% of their savings in real estate, a move that has benefited Thailand’s luxury condo and apartment sector for several years.

Kashif Ansari is the co-founder and CEO of Juwai IQI Group, a real estate marketing firm that helps connect Chinese buyers to properties in Southeast Asia. He told Voice of America’s Korean Service that the trend is now leveling off:

This year, Thailand is no longer the number one destination for Chinese buyers like it was in earlier years.

“Instead, it is fifth, and the top four destinations are all the traditional English-speaking countries with prestigious educational sectors,” Ansari said via email from Kuala Lumpur. 

Thailand was the top location for Chinese to invest in residential properties from 2018 to 2021, according to the firm’s list of the 10 top countries. 

Popular countries

By 2022, Thailand was fourth, and now, in the first half of this year, it is fifth.

Data from the Real Estate Information Center in Bangkok underlined the importance of Chinese buyers in the Thai real estate market since 2018. They purchased 3,562 units worth more than US$511 million in the first nine months of 2022.

The four most popular countries among Chinese buyers in the first half of this year were Australia, Canada, the United Kingdom and the United States, according to Juwai IQI.

CEO Ansari said they are buying homes in Australia to move and live there permanently. Now, Chinese purchasing residential properties in Thailand tend to be investors. Ansari said:

Most Chinese buyers [in Australia] this year have been purchasing for their own use and are on the path to becoming new Australian citizens. 

Chinese exports have been the main driver of growth. Image: Shutterstock

“Many of the buyers that we work with are either students studying in the destination country or are planning on moving [there] and purchasing a home to live in,” Ansari added.

Neighboring Vietnam ranked ninth in Ansari’s survey and, according to real estate agents, is less reliant on Chinese investors than Thailand.

Nguyen Thanh Nga, the chairman of Ho Chi Minh City-based Global Green Real Estate property developer, told VOA’s Vietnamese Service that “Chinese investors are mainly interested in apartments in big cities like Hanoi and Ho Chi Minh.”

He said the crash in the Chinese property market has not affected Vietnam and that investment from there remains steady.

Su Ngoc Khuong, the senior director of investment at Ho Chi Minh City-based real estate firm Savills Vietnam, told VOA’s Vietnamese Service that the country does not heavily rely on Chinese buyers.

Affluent citizens

Most of those using his firm are from the US, Europe, Japan, South Korea, Hong Kong and Singapore.

Still, a study by Shanghai Jiaotong University’s Advanced Institute of Finance and financial firm Charles Schwab revealed overall confidence among China’s growing numbers of affluent citizens fell slightly this year.

That resulted in a slowdown in high-end purchases.

The reason stems from the problems plaguing the second-largest economy, such as youth unemployment, stalling exports in August, and shrinking household consumption.

This in turn has fueled deflation.

Unfinished real estate projects have hit China’s economy. Image: YouTube

Also, a massive real estate crisis in China has led to speculation that the next step in the nation’s decades-long red-hot economic growth may be stagnation.

These financial difficulties at home mean Chinese buyers are hesitating with Thai investments. Xin Qui is a founder of Taiheju, a property agency in Thailand that mostly deals with Chinese customers intent on renting or investing in properties in the country. 

She told VOA’s Thai Service in a telephone interview:

During the peak in 2018, it only took us a few weeks to close a deal, or within one week if a client came and saw the property. Now it takes a few months.

Investment sources

Prashanth Parameswaran, a fellow at the Wilson Center and founder of the weekly ASEAN Wonk newsletter, pointed to China’s economic slowdown. He told VOA’s Korean Service:

We are seeing a recalibration of post-pandemic economic realities, and that includes the current slowdown of China’s economy.

“Whether or not this continues in the long run will depend on the actions of other Chinese investors moving forward and what Southeast Asian states can do to manage this fallout both with Beijing, as well as with other potential investment sources,” he said.

Yiamyut Sutthichaya and Le Nguyen contributed to this report.

Christy Lee is a journalist with Voice of America.

This article is republished courtesy of VOA. Read the original article here.

The views and opinions expressed in this article do not necessarily reflect the official policy of China Factor.