colliers international Thailand ScandinaviaN Property investment in thailand april 28 THE SWEDISH-THAI PROPERTY GOLD RUSH Market Indicators 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. Supply Demand TAKE UP RATE AVERAGE SELLING PRICE 27 28F The number of Scandinavian visiting Thailand compared with the total number of Scandinavian population represents the highest percentages which is 3.8%. The majority of Scandinavian tourists travelling to Thailand are from Sweden, follows by Finland. The increasing number of Scandinavian travelling to Thailand in 26 & 27 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 16.2 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 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. 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. 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, 27 and are running through April 28, the peak travel season for the outbound Scandinavian market. www.colliers.com/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 1 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 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: 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. Country Bolivia (22) Zambia (24) China (24) Mexico (24) United States (2) Burkina Faso (23) Isarel (21) India (24) Ukraine (23) Figure 1 : The Gini index of some selected countries 6 51 47 46 41 4 39 37 28 Sweden (2) 25 Number 1 2 3 4 5 6 7 Source : World Bank, World Development Indicators, May 25, 27 2 Colliers International COLLIERS INTERNATIONAL 2
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 27 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 27 Despite, the scandinavian tourists visiting Thailand comprised only 5% of total international tourists in 27, it is noticeable that the number of Scandinavia visiting Thailand represents 3.8% of total Scandinavian population in the year 27. Scandinavian 757,734 5% The Americas 817,564 6% South Asia 685,574 5% Oceania 731,283 5% Middle East 453,891 3% Africa 14,941 1% East Asia 7,981,25 55% Other Europe 2,932,36 2% Source : Immigration Bureau, Police Department Despite, the scandinavian tourists visiting Thailand comprised only 5% of total international tourists in 27. 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 3.8% of total Scandinavian population in the year 27. The number of tourist arrivals to Thailand by region compared with Total population in each region: Region No. of travellers visiting Thailand in 27 Total Population In mid 27 % of visiting Thailand from total population East Asia 7,981,25 2,55,,.39% Other Europe 2,932,36 793,5,.37% Scandinavian 757,734 24,6, 3.8% The Americas 817,564 563,8,.15% South Asia 685,574 1,498,1,.5% Oceania 731,283 115,5,.63% Middle East 453,891 115,5,.39% Africa 14,941 54,7,.19% 14,464,228 5,22,7,.28% Source : Immigration Bureau, Police Department & Population Reference Bureau COLLIERS Colliers INTERNATIONAL International 3
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 23 and 27. The number of Scandinavian tourist arrivals Thailand showing a positive growth rate of 17.4% to 757,734 persons in 27 from just 645,361 persons in 26. TAT Stockholm has forecasted a total of 73, visitors from Scandinavian travelling to Thailand by 27. Figure 3 : The number of Scandinavian tourist arrivals to Thailand between 23 and 27 No. of tourists The number of Scandinavian tourist arrivals Thailand showing a positive growth rate of 17.4% to 757,734 persons in 27 from just 645,361 persons in 26. 8, 7, 6, 5, 4, 3, 425,52 462,617 489,167 645,361 757,734 2, 1, 23 24 25 26 27 Year Source : Immigration Bureau, Police Department The majority of Scandinavian tourists travelling to Thailand are from Sweden which is over 374, persons by 27, follows by Finland with approximately 138,332 persons in 27. 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 Thailand being regularly voted as travellers favorite tourist destination. According to the 27 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. 4 Colliers International COLLIERS INTERNATIONAL 4
No. of tourists 4, 35, Figure 4 : The number of Scandinavian tourist arrivals to Thailand between 22 and 27 by country 3, 25, 2, 15, Denmark Sweden Norway Finland The majority of Scandinavian tourists travelling to Thailand are from Sweden which is over 374, persons by 27, follows by Finland with approximately 138, persons in 27. 1, 5, 22 23 24 25 26 27 Source : Immigration Bureau, Police Department Quarter From the year 27 comparing to the year 26, it is seen that the number of tourists from Scandinavian have increased in all four countries. 4, 35, Figure 5 : The number of Scandinavian tourist arrivals to Thailand in 27 compared with 26 by country No. of tourists 3, 25, 2, 15, 1, Denmark Sweden Norway Findland 5, 26 27 Period Period Source : Immigration Bureau, Police Department COLLIERS Colliers INTERNATIONAL International 5
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 27, follows by Swedish at 16.2 days, Danish 14.81 days, and Finland 14.11 days. The trend of the average length of stay for Scandinavian tourists keeps increasing since 23 to 27. Figure 6 : Average length of stay of Scandinavian tourist arrivals to Thailand between 23 and 27 by country 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. Days 17. 16.5 16. 15.5 15. 14.5 14. 13.5 13. Denmark Sweden Norway Finland 12.5 23 24 25 26 27 Year Source : Immigration Bureau, Police Department The tourism sector is also affected by the seasonal changes in tourist arrivals. From empirical data, the number of Scandinavian 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 and November. The charts below have shown monthly seasonality changes between 26 and 27. Figure 7 : Total number of Scandinavian tourist arrivals from each country to Thailand by month in 26 and 27 No. of tourists No. of tourists 14, 12, 12, 1, 1, 8, 8, 6, 6, 4, 4, 2, 2, Year January February March April May June July August September October November December January February March April May June July August September October November December Year 26 27 Denmark Sweden Norway Finland Source : Immigration Bureau, Police Department 6 Colliers International COLLIERS INTERNATIONAL 6
Figure 8 : Four popular tourist attractions of Scandinavian tourist arrivals to Thailand between 22 and 27 No. of tourists 45, 4, 35, 3, 25, 2, 15, 1, Phuket Bangkok Samui Phang Nga 5, 22 23 24 25 26 27 Year 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 25 is directly attributable to the 24 tsunami aftermath. However, the market bounced back quickly and maintained its upward trend in 26. The sharp decline in visitors to Phuket in 25 is directly attributable to the 24 tsunami aftermath. However, the market bounced back quickly and maintained its upward trend in 26. 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. COLLIERS Colliers INTERNATIONAL International 7
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 Scandinavian village rolled out the carpet for Scandinavian investors and created an interest for living in Thailand. No. Business Type No. of Swedish company registered in Thailand No. of company in Thailand Swedish registered capital (Million Baht) Total registered capital (Million Baht) 1 Construction 51 52,652 27.82 231,955.13 2 Real Estate Brokerage 73 13,32 43.2 386,588.26 3 Property Management 1 15.2 214.9 4 Land Development 2 1,277 2.76 41,177.97 5 Civil Engineer 2 3,274 1.89 2,919.24 6 Retail 2 692.49 24,825.6 Total 131 71,212 76.18 75,68.29 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 43.2 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 4.8 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 23 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 89 residential units, follows by Hua Hin and Pattaya, with represent 468 and 259 residential units respectively. 8 Colliers International COLLIERS INTERNATIONAL 8
Figure 9 : The number of residential units developed by Scandinavian investors in each location No. of units 9 8 89 7 6 5 468 4 There are a good combination of villa and condominium in Rayong, however the number of condominium units in Rayong is higher than villa. 3 2 1 137 Bangsaen Rayong Source : Colliers International Thailand Research 37 Koh Chang 259 Pattaya Hua Hin 4 Ranong 8 Koh Lanta 138 6 Koh Samui Prachuap Kirikan 195 Phuket Location 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 28, with the approximately 18 units. Figure 1 : The number of residential type developed by Scandinavian investors in each location No. of units 5 45 456 4 35 353 3 292 25 2 176 179 15 1 137 16 99 8 138 5 37 Bangsaen Rayong Koh Chang Pattaya Hua Hin Ranong Koh Lanta Koh Samui Prachuap kirikan 4 6 16 Phuket Location Supply of concominium (unit) Supply of villa (unit) Source : Colliers International Thailand Research COLLIERS Colliers INTERNATIONAL International 9
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. Koh Samui 2,7 13% Prachuap Kirikan 198 1% Phuket 1,731 11% Bangsaen 685 4% Rayong 4,791 29% Koh Lanta 6 4% Ranong 18 1% Hua Hin 4,15 25% Pattaya 1,55 1% Koh Chang 284 2% 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 23 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. 1 Colliers International COLLIERS INTERNATIONAL 1
Project pricing of Scandinavian-invested 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. The average price per square metre by 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. LOCATION AVERAGE PRICE RANGE THB / SQM Bangsaen 29,412-67,144 Rayong 38,256-85, Koh Chang 74, - 98, Pattaya 38, - 95, Hua Hin 66, - 8, Koh Lanta 4, - 6, Koh Samui 125, -13, Prachuap Kirikan 43, Phuket 77, - 16, Source : Colliers International Thailand Research COLLIERS Colliers INTERNATIONAL International 11
OUTLOOK 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. 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, 27 and are running through April 28, the peak travel season for the outbound Scandinavian market. 267 offices in 57 countries on 6 continents 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 1,171 Professionals Contact information THAILAND: Bangkok Patima Jeerapaet Managing Director Colliers International 17/F Ploenchit Center Klongtoey Bangkok 111 Tel: 662 656 7 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. 12 Colliers International www.colliers.com/thailand