Chinese & Russian Flocks Buying Real Estate in Thailand, Why Not Cambodia?
Amidst a surge in real estate investments from Chinese and Russian buyers in Thailand, Cambodia’s real estate market finds itself at a pivotal juncture, poised to learn valuable lessons from its neighboring country.
Thailand’s Real Estate Information Centre (REIC) reports an unprecedented influx of Chinese and Russian investors, with Chinese buyers alone accounting for 49% of units transferred to foreigners during the first nine months of 2022, while Russians dominate the condominium market in Phuket.
As Cambodia navigates the challenges posed by the post-COVID-19 era, it must strategically adopt incentives and bolster trust to attract high-quality, sustainable investors, much like its regional counterparts.
According to the REIC, Chinese buyers have emerged as the largest foreign purchasers of condominium units in Thailand since 2018, with a staggering 3,562 units worth THB17.94 billion acquired during the first nine months of 2022. The allure of Thailand’s real estate market, coupled with an anticipated influx of approximately 5 million Chinese visitors this year, has propelled Chinese buyers to seek property investments in the country.
Meanwhile, Russians have established their dominance in the Phuket condominium market, holding approximately 40% of foreign-owned condominiums valued at THB880 million. This put Russians as the top condo purchasers in Phuket.
The motivations driving Chinese and Russian investors to Thailand extend beyond the pre-existing trend. The uncertainties brought forth by the COVID-19 pandemic, along with geopolitical factors such as the Russian-Ukraine war, have intensified their interest in acquiring property in the country, especially in those major cities such as Bangkok, Phuket, Pattaya, and Chiang Mai. Russia’s invasion of Ukraine has shifted Russian investors’ focus away from Europe, redirecting their attention to safer havens like Thailand, where property prices are comparatively lower.
Before the Russian-Ukraine war, nations like Bulgaria and Germany are the property buying destination for Russians. However, with the invasion, Europe is no longer the top choice. The Middle East, Turkey, and Southeast Asia were the three most sought-after locations for buying property in 2022.
A Moscow-based firm ‘Intermark Real Estate’ stated that Southeast Asia contributed to 27% of international deals in 2022, up from 12% in 2021.
Al Jazeera reports that Thailand, particularly Phuket, has become a sanctuary for Russian citizens seeking refuge and property investment opportunities. Russian buyers, captivated by the allure of beachfront condos, have invested substantial sums exceeding US$500,000.
Chinese buyers, on the other hand, have a slightly different incentive driving their overseas property purchases. Reuters interviews reveal that many Chinese investors view property acquisition as a safety net against future disease outbreaks akin to the COVID-19 pandemic, as well as a means to mitigate economic risks in their home country.
The traumatic experiences of lockdowns and sudden policy changes have prompted wealthy Chinese individuals to seek stability and flexibility in foreign property ownership. The appealing combination of attractive pricing, a flexible lifestyle, access to quality education and healthcare, and a thriving tourism and hospitality sector have further enticed Chinese investors to turn their gaze towards Thailand.
“Chinese are buying houses, sending their children to international schools, and having their parents come to stay in Thailand to take care of the grandkids,” said Mesak Chunharakchot, the president of the Thai Real Estate Association.
One property agent Owen Zhu said that Chinese buyers’ behaviour has changed a lot after the pandemic. Chinese are now buying luxurious apartments to live in, not to keep them empty anymore.
He added that with $290,000 we can only buy a simple home in China’s first-tier cities, but can buy a luxury apartment in the heart of Bangkok. Therefore, some would sell one of their houses in China and buy a property in Thailand for retirement instead.
What can Cambodia learn from this?
Cambodia’s real estate market stands at a critical crossroads, with the opportunity to capitalize on the valuable lessons emerging from Thailand’s success in attracting Chinese and Russian investors. To foster a sense of security and stability among potential investors, Cambodia must embrace incentives beyond price and return on investment, and prime location.
Given the time of uncertainty, people need to feel secure and the place they bought their property must provide adequate conditions for them to build their second home.
Factors such as quality of life, access to quality education and healthcare, well-defined laws and regulations, visa incentives, a flexible lifestyle, and a vibrant tourism and hospitality sector must take centre stage. By building trust and instilling confidence in investors, Cambodia can position itself as an appealing destination for high-quality, sustainable investments, even in the face of post-pandemic uncertainties.
As Cambodia’s real estate sector endeavors to recover from the setbacks of the COVID-19 pandemic, it must recognize the need for adaptability and innovation. While neighboring countries such as Thailand and Vietnam prepare themselves for a new era of real estate investment, Cambodia has the potential to carve its own path towards success.
By embracing the right mechanisms and fostering an investor-friendly environment, Cambodia can not only weather the challenges but also emerge as a compelling destination for foreign investments, safeguarding its financial stability in the process. (Read more)
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