Scandinavian Property Investment in Thailand 2008 by Colliers International Thailand

Market Research S c a n di n av iaN P roperty i n v estme n t i n thaila n d THE SWEDISH-THAI PROPERTY GOLD RUSH | A pril | 2 0 0 8

c o l l i e r s i n t e r n at i o n a l

| Thailand

S c a n d i n av i a N P r o p e rt y i n v e s t m e n t i n t h a i l a n d

| april

|

2008

THE SWEDISH-THAI PROPERTY GOLD RUSH Market Indicators 2007

2008F

Supply

Demand

• The increasing interest of real estate from the Scandinavian market

is directly connected to the upsurge in tourism to Thailand. Thailand would

be an ideal country with its warm climate along with low costs for living and labor.

• The number of Scandinavian visiting Thailand compared with the total number of

Scandinavian population represents the highest percentages which is 3.08%.

• The majority of Scandinavian tourists travelling to Thailand are from Sweden,

follows by Finland.

• The increasing number of Scandinavian travelling to Thailand in 2006 & 2007

represented by 32% & 17.4% respectively.

• Norwegian has the longest average length of stay in Thailand with more than 16.42

days, follows by Swedish with 16.20 days, Danish with 14.81 days and Finland

with 14.11 days.

• The number of Scandinavian records peak numbers in December, January

and February. The rebound is generally strong again in October and November.

• The popular Andaman Sea beach resorts of Phuket/Khaolak remain the prime

destination among Scandinavian visitors.

• The highest project sales value of Thai-Scandinavian joint venture is in Rayong

which is approximately THB 4.8 billion, represents 29% of total Thai-Scandinavian

joint venture project sales value.

• Rayong shows highest interest for Scandinavian developers since its secure

area, near to Bangkok, no traffic, no pollution and expected increase in property.

• End users have chosen to buy condominium as a second vacation home because of its

convenience and completed facilities compared to villa.

• Glen Asia & Logans are the leading real estate companies with Scandinavian majority

shareholding, with their projects are concentrated in Rayong.

•

TAKE UP RATE AVERAGE SELLING PRICE

The increasing interest of real estate from the Scandinavian market is directly connected to the upsurge in tourism to Thailand. The flow of Scandinavian interest in Thai property started from Sweden and later spread to Denmark and Norway. Earlier people of these countries tended to buy resort properties in Spain and France.

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Demand for Thai property by Scandinavian is spreading to Phuket and Koh Samui since these two locations are very attractive tourism destinations for Scandinavians.

This trend is being supported by flight charters that began in December, 2007 and are running through April 2008, the peak travel season for the outbound Scandinavian market.

The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

Scandinavian, especially Sweden, is the most interesting country in attracting their population to travel to Thailand as this country has the lowest of Gini Index of income distribution. The Gini index is the most common measure of income inequality. It is constructed so that zero corresponds to perfect income equality which refers to everyone has the same income, while 100 corresponds to income equality which is one person has all the income while everyone else has none.

The median value of the Gini index across

The Gini index is the most common measure of income inequality. It is constructed so that zero corresponds to perfect income equality which refers to everyone has the same income. The Gini Index of Sweden is at 25 which represent the lowest number.

the world’s countries is 39. Greater income inequality is associated with weakened social cohesion and worse health status. The Gini Index of Sweden is at 25 which represent the lowest number as you can see on the below chart:

Figure 1 : The Gini index of some selected countries Country

60

Bolivia (2002) Zambia (2004)

51 47

China (2004)

46

Mexico (2004) United States (2000)

41

Burkina Faso (2003)

40 39

Isarel (2001) 37

India (2004) 28

Ukraine (2003) 25

Sweden (2000)

0

10

20

30

Number 40

50

60

70

Source : World Bank,World Development Indicators, May 25, 2007

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

TOURISM INDUSTRY FROM SCANDINAVIAN

Official figures from the Tourism Authority of Thailand (TAT) revealed that the number of tourist arrivals to Thailand for the year 2007 has shown the figure about 14.5 million

persons. Scandinavian tourist arrivals to Thailand represent about 5% of the total international tourist arrival to Thailand.

Figure 2 : The number of tourist arrivals to Thailand for the year 2007

Despite, the scandinavian tourists visiting Thailand comprised only 5% of total international tourists in 2007, it is noticeable that the number of Scandinavia visiting Thailand represents 3.08% of total Scandinavian population in the year 2007.

South Asia 685,574 5%

Oceania 731,283 5%

Middle East 453,891 3%

Africa 104,941 1%

East Asia 7,981,205 55%

The Americas 817,564 6% Scandinavian 757,734 5%

Other Europe 2,932,036 20%

Source : Immigration Bureau, Police Department

Despite, the scandinavian tourists visiting Thailand comprised only 5% of total international tourists in 2007. If we compare the number of tourists visiting Thailand in each region with the total population of each

region, it is noticeable that the number of Scandinavia visiting Thailand represents 3.08% of total Scandinavian population in the year 2007.

The number of tourist arrivals to Thailand by region compared with Total population in each region: No. of travellers

Total Population

% of visiting Thailand

visiting Thailand in 2007

In mid 2007

from total population

East Asia

7,981,205

2,055,000,000

0.39%

Other Europe

2,932,036

793,500,000

0.37%

Scandinavian

757,734

24,600,000

3.08%

The Americas

817,564

563,800,000

0.15%

South Asia

685,574

1,498,100,000

0.05%

Oceania

731,283

115,500,000

0.63%

Middle East

453,891

115,500,000

0.39%

Africa

104,941

54,700,000

0.19%

14,464,228

5,220,700,000

0.28%

Region

Source : Immigration Bureau, Police Department & Population Reference Bureau

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

From data obtained from the Tourism Authority of Thailand (TAT) which is illustrated below graph, it is clear to see that the number of Scandinavian tourists have been on the increase yearly between 2003 and 2007. The number of Scandinavian tourist

arrivals Thailand showing a positive growth rate of 17.4% to 757,734 persons in 2007 from just 645,361 persons in 2006. TAT Stockholm has forecasted a total of 730,000 visitors from Scandinavian travelling to Thailand by 2007.

Figure 3 : The number of Scandinavian tourist arrivals to Thailand between 2003 and 2007 No. of tourists

The number of Scandinavian tourist arrivals Thailand showing a positive growth rate of 17.4% to 757,734 persons in 2007 from just 645,361 persons in 2006.

800,000

757,734

700,000

645,361

600,000 462,617

500,000

489,167

425,502

400,000 300,000 200,000 100,000

0

Year 2003

2004

2005

2006

2007

Source : Immigration Bureau, Police Department

The majority of Scandinavian tourists travelling to Thailand are from Sweden which is over 374,000 persons by 2007, follows by Finland with approximately 138,332 persons in 2007. However, there is a positive growth rate of tourists from Scandinavian. Thailand continues to remain the top long haul destination for Scandinavian visitors. Various consumer polls in Norway and Sweden see

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Thailand being regularly voted as travellers’ favorite tourist destination. According to the 2007 annual reader’s survey on outbound travel organized by Res Magazine, the second most popular travel magazine in Sweden, the Swedish traveller’s love Thailand is neverending.

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

Figure 4 : The number of Scandinavian tourist arrivals to Thailand between 2002 and 2007 by country No. of tourists 400,000 350,000 300,000

Denmark

250,000 200,000

Sweden Norway

150,000

Finland

100,000

The majority of Scandinavian tourists travelling to Thailand are from Sweden which is over 374,000 persons by 2007, follows by Finland with approximately 138,000 persons in 2007.

50,000 0

Quarter 2002

2003

2004

2005

2006

2007

Source : Immigration Bureau, Police Department

From the year 2007 comparing to the year 2006, it is seen that the number of tourists from Scandinavian have increased in all four countries.

Figure 5 : The number of Scandinavian tourist arrivals to Thailand in 2007 compared with 2006 by country No. of tourists 400,000 350,000 300,000 250,000 200,000

Denmark

150,000

Norway

Sweden Findland

100,000 50,000 0

Period 2006

2007 Period

Source : Immigration Bureau, Police Department

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

It is interesting to note that the average length of stay in Thailand has increased year on year for 4 countries of Scandinavian. Norwegian has the longest average length of stay in Thailand at more than 16.42 days in 2007, follows by Swedish at 16.20 days, Danish 14.81 days, and

Finland 14.11 days. The trend of the average length of stay for Scandinavian tourists keeps increasing since 2003 to 2007.

Figure 6 : Average length of stay of Scandinavian tourist arrivals to Thailand between 2003 and 2007 by country Days

The number of Scandinavian tourist’s records peak numbers in December and starts to decline in January and February. The high season recommences in October and November.

17.00 16.50 16.00 15.50

Denmark

15.00 14.50

Sweden Norway

14.00

Finland

13.50 13.00 12.50

Year 2003

2004

2005

2006

2007

Source : Immigration Bureau, Police Department

The tourism sector is also affected by the and November. The charts below have shown seasonal changes in tourist arrivals. From monthly seasonality changes between 2006 empirical data, the number of Scandinavian and 2007. tourist’s records peak numbers in December and starts to decline in January and February.

It then declines and plateaus in May to August.

The high season recommences in October

Figure 7 : Total number of Scandinavian tourist arrivals from each country to Thailand by month in 2006 and 2007 No. of tourists No. of tourists

140,000

r

r be

be em

ec

ov em

D

r

er

O

ct

ob

N

st

be

gu

em

Au

pt

e

Ju ly

Se

Jan

Fe b

2006

ay

Year ua

0

Ju n

r

r

be

be

em ec

ov em

N

D

r

er ob

ct O

st

be

gu

em

Au

Se

pt

e

Ju ly

ay

Ju n

ril

M

Ap

y ar

ar ch M

Jan

Fe b

ua

ry

Year ru

0

ril

40,000 20,000

M

40,000 20,000

Ap

60,000

y

60,000

ar ch

80,000

M

100,000

80,000

ry

100,000

ar

120,000

ru

120,000

2007

Denmark

Sweden

Norway

Finland

Source : Immigration Bureau, Police Department

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

Figure 8 : Four popular tourist attractions of Scandinavian tourist arrivals to Thailand between 2002 and 2007 No. of tourists 450,000 400,000 350,000 300,000 250,000 200,000

Phuket

150,000

Samui

Bangkok Phang Nga

100,000 50,000 0

Year 2002

2003

2004

2005

2006

2007

Source : Tourism Authority of Thailand (TAT)

The popular Andaman Sea beach resorts of Phuket/Khao Lak remain the prime destination among Scandinavian visitors. However, as the percentage of Scandinavian repeat visitors is about 62 percent, TAT has organized tour operators and media fam. trips in an attempt to offer alternative destinations around Thailand. The sharp decline in visitors to Phuket in 2005 is directly attributable to the 2004 tsunami aftermath. However, the market bounced back quickly and maintained its upward trend in 2006.

The sharp decline in visitors to Phuket in 2005 is directly attributable to the 2004 tsunami aftermath. However, the market bounced back quickly and maintained its upward trend in 2006.

The largest province of the South located 685 kilometres from Bangkok, Surat Thani (often known as Surat in short) is a perfect hideaway for European vacationers seeking a relief from the harsh winters. It is actually the mainland jumping off point for Koh Samui, Thailand’s third largest island, and its neighbor Ko Pha-ngan, a celebrated island hosts the biggest beach full moon party. The TAT is also hoping to encourage travel to Chumphon and Ranong, a province with high potential given its wealth of natural resources and pristine landscape, especially the natural hot springs for which the province is known.

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

REAL ESTATE BUSINESS OF SCANDINAVIAN IN THAILAND

Recently, Swedish has turned to Thailand for investment in real estate business which is classified by the business type in the below table: The Swedish company registered in Thailand No. of Swedish No.

Scandinavian village rolled out the carpet for Scandinavian investors and created an interest for living in Thailand.

Business Type

company

No. of company

Swedish registered

registered in

in Thailand

capital (Million Baht)

Thailand 1

Total registered capital (Million Baht)

Construction

51

52,652

27.82

231,955.13

2

Real Estate Brokerage

73

13,302

43.20

386,588.26

3

Property Management

1

15

0.02

214.09

4

Land Development

2

1,277

2.76

41,177.97

5

Civil Engineer

2

3,274

1.89

20,919.24

6

Retail

2

692

Total

131

71,212

0.49

24,825.60

76.18

705,680.29

Source : Department of Business Development, Ministry of Commerce

Swedish is interested in real estate brokerage as we can notice that there are 73 Swedish registered companies in Thailand with investment around 43.20 million baht, follows by construction business which represents 51 Swedish registered companies with investment of 27.82 million baht in Thailand. The majority of Swedish Investment is in Rayong Province, represents 34.13 million baht or 45% of total Swedish investment in Thailand.

The Scandinavian registered capital in Rayong Province is approximately THB 132.33 million from 39 registered companies. The highest registered capital comes from Norway with approximately 40.80 million baht. However, the registered capital of Scandinavian Countries in Thailand has indicated less different registered capital among 3 countries which are Norway, Denmark and Sweden.

SUPPLY The pioneer project, launched by a Swedish investor back in 2003 and initially intended as a 55+ membership estate for retirees with full onsite facilities, was in fact the one which paved the way for the Scandinavian property market’s fast expansion in Thailand. Scandinavian village rolled out the carpet for Scandinavian investors and created an interest for living in Thailand.

The number of residential unit developed by Scandinavian shows the highest number of unit in Rayong, with 809 residential units, follows by Hua Hin and Pattaya, with represent 468 and 259 residential units respectively.

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

Figure 9 : The number of residential units developed

by Scandinavian investors in each location No. of units 900

809

800 700 600 500

468

400 259 137

rik

m

Ki

Sa

uk et

an

ui

a nt La

ap Pr

ac

hu

no Ra

60

Location

ng

in H ua H

Pa

tta ya

ng C

ha

g Ko h

en sa ng Ba

80

40

37

Ko h

100 0

195

138

Ko h

200

Ra yo n

There are a good combination of villa and condominium in Rayong, however the number of condominium units in Rayong is higher than villa.

Ph

300

Source : Colliers International Thailand Research

There are a good combination of villa and condominium in Rayong, however the number of condominium units in Rayong is higher than villa as there will be another new project

of Glen Asia which will be started construction by the end of 2008, with the approximately 180 units.

Figure 10 : The number of residential type developed by Scandinavian investors in each location No. of units 500 456

450 400

353

350

292

300 250 200

179

176 160

150

138

137

99

100 50 0

80

0

Bangsaen

0

Rayong

60

40

37

0

Koh Chang

Pattaya

Hua Hin

Ranong

Supply of concominium (unit)

0

Koh Lanta

Koh Samui

0

Prachuap kirikan

16

Phuket

Location

Supply of villa (unit)

Source : Colliers International Thailand Research

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

ESTIMATED SALES VALUE OF THAI-SCANDINAVIAN JOINT VENTURE PROJECTS CURRENTLY MARKETED BY LOCATION The highest sales value of Thai-Scandinavian joint venture projects is in Rayong which is approximately THB 4.8 billion, represents 29% of total Thai-Scandinavian joint venture project sales value, follows by Hua Hin, represents 25% and Koh Samui, represents 13%.

Below chart has shown the estimated sales value of real estate business currently marketed by Thai-Scandinavian joint venture in each location in Thailand: Figure 11 : Estimated Sales Value of Thai-Scandinavian Joint Venture Projects Currently Marketed by location

The highest sales value of Thai-Scandinavian joint venture projects is in Rayong which is approximately THB 4.8 billion, represents 29% of total Thai-Scandinavian joint venture project sales value.

Prachuap Kirikan 198 1%

Phuket 1,731 11%

Bangsaen 685 4% Rayong 4,791 29%

Koh Samui 2,070 13%

Koh Lanta 600 4% Ranong 180 1%

Koh Chang 284 2% Hua Hin 4,105 25%

Pattaya 1,550 10%

Source : Colliers International Thailand Research

DEMAND Earlier people of these countries generally bought resort properties in Spain and France but over the past three to four years, aside from Thailand, they have snapped up real estate in Turkey and Bulgaria but investment to the former has now dropped off. Today, more likely Thailand is on everybody’s lips. Thailand surely has a long way to go before reaching the high number of Scandinavian homes like in Spain. What is perhaps significantly different is Thailand’s enormous popularity – despite the much longer travel distance – and the speed with which the property market is developing. The surge in buyers from Scandinavia acquiring retirement and holiday homes here are possibly outnumbering Spain by now as its allure wears off due to rising costs. End users have chosen to buy condominium as a second vacation home since it is more convenient for them as well as there will be completed facilities compared to villa. Also, they will have community among their countries.

Recently, the factor in property selection of Scandinavian is concerning about the distance from Bangkok as it is noticeable that the good take up rate of property is in Rayong, Bangsaen and Pattaya with their close proximity to Bangkok which is a big advantage. It is just 45 minutes to Bangsaen, 1 and a half hour to Pattaya, and 2 hours to Rayong from Suvarnabhumi International Airport. However, Hua Hin property growth just starts to take off, benefiting from its close proximity to Bangkok and a prestigious royal history. Located on the southeast shore of Thailand about 230 km south of Bangkok, it has been the Thai royal family’s holiday retreat since 1928, and His Majesty the King resides there sometimes.

The main developers in the area Rayong and Pattaya are Glen Asia and Logans Thailand Company Limited. However, there are many Scandinavian developers in Hua Hin which are Logans Thailand Company Limited, Sierra Project and Natural Valley Estate.

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

Project pricing of Scandinavian-invested being found in Bangsaen and the highest in projects covers a wide range, with the lowest Koh Samui. per square metre price for a residential unit

The average price per square metRE by location LOCATION

Project pricing of Scandinavianinvested projects covers a wide range, with the lowest per square metre price for a residential unit being found in Bangsaen and the highest in Koh Samui.

AVERAGE PRICE RANGE THB / SQM

Bangsaen

29,412 - 67,144

Rayong

38,256 - 85,000

Koh Chang

74,000 - 98,000

Pattaya

38,000 - 95,000

Hua Hin

66,000 - 80,000

Koh Lanta

40,000 - 60,000

Koh Samui

125,000 -130,000

Prachuap Kirikan

43,000

Phuket

77,000 - 106,000

Source : Colliers International Thailand Research

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

OUTLOOK

267 offices in 57 countries on 6 continents

Scandinavians in recent years have been active investors in Thai property. Swedish home buyers in the hundreds are spearheading an incredibly strong and growing Nordic property boom in Thailand. What is clear is that the trend of owning property and retiring overseas is going to grow in Thailand as the preferred location in Asia. More developers are targeting retirees, who are considering staying here permanently or seasonally, as well vacation property investors. Thailand is well-positioned as a well-recognized tourist brand.

USA 95 Canada 17 Latin America 17 Asia Pacific 53 EMEA 85 US$1.6 billion in annual revenue 673 million square feet under management 10,171 Professionals

However, we believed that the demand for Thai property by Scandinavian is spreading to Phuket and Koh Samui since these two locations are very attractive tourism destinations for Scandinavians. This trend is being supported by flight charters that began in December, 2007 and are running through April 2008, the peak travel season for the outbound Scandinavian market.

Contact information THAILAND: Bangkok Patima Jeerapaet Managing Director Colliers International 17/F Ploenchit Center Klongtoey Bangkok 10110 Tel: 662 656 7000 Fax: 662 656 7111

RESEARCHER: Risinee Sarikaputra Senior Manager | Research

This report and other research materials may be found on our website at www.colliers.com/thailand. Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.

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This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.

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