Here’s Why Thailand Is a Resilient Market for Long-Term Luxury Investment

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Thailand roils on political and economic uncertainty, but for higher net worth investors, areas like Bangkok wink their welcome.

In less than a century, Thailand has had it all: 21 different constitutions and 19 attempted coups, 12 of which were successful. The real estate market held on. The economy roller-coasted through a recession in 1997 and floods in 2012. The ironic result: a building boom that littered Bangkok’s CBD with glitzy high-rises.

At one time, so-called Teflon Thailand promised a model of market resilience. Since then, terrorism, the growth of extremism, and a declining economy have scuttled the enthusiasm of foreign investors.

“It is widely accepted that the Teflon days have passed,” Risinee Sarikaputra, research and consultancy director of Knight Frank Thailand told Property Report this month. “We are now facing new challenges in our overall economy, such as our continually declining exports, which we depend greatly on, and a global economy no longer functions the way it used to.”

Sarikaputra recommends that investors forget about short-term investment and focus on long-term gain. Thailand has certain areas that are abuzz with opportunity for the higher-end market. In Bangkok, for instance, foreign buyers from Hong Kong, Singapore, and China are snapping up condominiums. Roughly 446,000 condos will show by the end of 2016, almost double that of 2012. The Bangkok housing index rose by 4.9 percent last year, and the condo index shot by a full 14 percent, according to the Bank of Thailand.

Smaller coastal towns, such as Phuket, are doing less well, although Phuket, admittedly, shows contradictory reports. On the whole, it seems that a drawling economy and a drippy ruble in Russia are pulling down demand for ultra-luxury villas in coastal towns, according to a study by Knight Frank and reports by experts, such as James Pitchon of CBRE, the world’s largest commercial real estate services firm.

Fortunately for high-net-worth investors, the nation claims an unparalleled beauty and tourist appeal that may lug Teflon-Thailand through its challenges. EThailand, Thailand’s leading portal on real estate, says that low property taxes and relatively lax foreign ownership laws titillate, too.

Nonetheless, buyers may remain dissuaded by Thailand’s political and economic duress. Both EThailand and Sarikaputra predict an improving economy and strengthening political market. They recommend buyers to consider playing the long game.

Image courtesy of Shutterstock

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