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
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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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