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Hong Kong Home Buyers in Thailand: An Investment Exodus for a Better Tomorrow

Hong Kong Home Buyers in Thailand: An Investment Exodus for a Better Tomorrow

According to the “International Housing Affordability Study: 2019” carried out by Demographia, a market research company, house prices in Hong Kong are the least affordable in the world. The Study is seconded by the real estate consultant CBRE’s survey, which says that Hong Kong retained the title as the world’s most expensive urban center to live. It also says that the neighboring city of Shenzhen reached the ranking of the five most expensive cities of the world for the first time.

Hong Kong is a territory that encompasses 1,104 square kilometers and accommodates over seven million people. The rise of the population, the shortage of land and the lack of proper residential planning by local government have contributed to higher rents in the former British colony. All combined increases speculation in the housing market, which favors building upscale, luxury apartments and shopping malls.

On the other hand, a stronger Yuan and a weaker Hong Kong Dollar have boosted the increasing demand for residential properties from mainland Chinese in recent years. For this reason, many are investing in Hong Kong, where they find it relatively cheaper, which has contributed to pushing the rents up.

Wealth Inequality

Shortage of affordable housing and soaring rents have led many Hong Kong people to live in sub-divided units, with rough living conditions. Wealth inequality is particularly affecting the young generations, as they simply cannot buy units. For this, and other reasons, they mostly choose to live with their parents or relatives. Moreover, unaffordable housing makes young couples delaying plans for marriage and to have kids. Adding to this, the list of public rental housing is too long.

As the housing prices are too expensive for most Hong Kong people, property developers promoted “nano flats” as an affordable way of living. Nevertheless, since many of these units are smaller than 18.5 sq.m., they hardly accommodate a bed, a small table (or desk) and a closet.

Different Realities

Hong Kong residents are increasingly investing in real estate in Bangkok because the housing prices stand just about a fifth of those in their homeland. It is almost impossible for an average middle-class person to purchase a decent sized unit in Hong Kong like those in Bangkok, even if home prices start to ease in the Chinese territory.

In fact, Hongkongers need to save their entire incomes for 19 and a half years before they can afford to buy a residential property in their home city, according to a report published by Demographia last year. On the other hand, they just need a four-year period to be able to purchase in Bangkok.

The majority choose to buy their first unit in Bangkok for investment, mostly wishing that property prices will raise either by infrastructure development in the city or by Thailand’s economic boost.

Purchasing Habits & Goals

Angel Real Estate has been selling to Hong Kong millennial and older generations. The most popular destination for their investment purpose is Bangkok and Pattaya. Usually, they come as a group of two or three friends, or with a family member.

Millennial, in general, will seek to buy a unit in Hong Kong later, with the help of the profit on investment made in Thailand. Since the capital invested is lesser, it will give them room to manage better their daily lives while having an asset that may grant them a future at home.

Older generations may consider retiring in Thailand, where life is affordable, and their home city is easily reachable by daily flights. In fact, Thailand is considered the best place to retire in the world, according to The Spectator Index on Twitter, 2019. The country is followed by Malaysia, Vietnam, Bali (Indonesia), Cambodia, Italy, and Portugal, among other countries.

Good Prospects

The return on investment in Bangkok real estate depends on the project, its location, accessibilities and, of course, the country’s economy. Tourism is one of the most important sectors to generate high income for Thailand. While the greater number of expats will boost the rental yields in Bangkok.

Overall, the city offers a wide range of residential property solutions that meet any customer’s budget and expectations. Adding to this, new BTS and MRT train lines are coming to light, connecting many of these projects to Bangkok’s Central Business District.

Thailand’s economy is stable and will grow sustainably. In fact, GDP per capita rose 3.8% last year, ahead of other Southeast Asian countries such as Malaysia (3.6%), Singapore (2.7%) and Brunei (- 1.9%). Forecasts for this and the next year place its growth slightly at the same pace, according to Asian Development Bank.

Hong Kong Buyers Favorite Locations

In Bangkok, with its population over 10 million people, the demand for Thai citizens to buy a first-hand residential property is very high, because many families choose to work and live in the city center or at least in its outskirts. There is a broad range of projects favoring lifestyle and well-being.

The second-hand market is also on demand. Buyers wanting to resale not only had their units at a cheaper price since they were built on land plots with a better location than the residential projects constructed afterward.

Hongkongers’ favorite property investments in Bangkok are located in Rama 9-Ramkhamhaeng, Thonburi and Sukhumvit. In these three neighborhoods, there are some of the most profitable projects in terms of rental yields.

Monté Rama 9 by Capital G is one of the residential projects in Rama 9-Ramkhamhaeng that is receiving great attention by Angel Real Estate buyers. The condo project inspired by a modern luxury resort has easy access to the center of Rama 9 (1.5 km), or to Thong Lor (5 km), part of the famous Sukhumvit. It will have easy access to MRT Orange Line, Ramkhamhaeng 12 Station, which is still under construction, and will be completed in 2023.

On the west bank of Chao Phraya River (Thonburi side) is being built the 36-story condo Tree Charan-Bang Phlat. The project by Pruksa will be 150 meter-walk from Bang Phlat MRT station.

Another popular choice is the Vertier 44/1, which consists of a 31-story residential condominium with 227 units in total. The property is facing Sukhumvit Road, about 20 meter-walk of Phra Khanong BTS station (Green Line).

If you need any further help or want to have a chat with us, please feel free to write an email to daniel.O@angelrealestate.co.th. We will be more than happy to discuss and support your international real estate investment.

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Daniel Oliveira

With over 10 years experience of journalism between Macau, Special Administative Region of People's Republic of China, and Portugal, Europe, I developed a special interest in real estate by observing closely the changes and impacts the sector has in people's lives. It was then a natural choice of going in depth and be passionate about the industry.

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