Chinese in Pattaya
by Heiner Moessing
According to google translate this is pronounced huanying and is Chinese for welcome, a word we people living in Pattaya should learn as Chinese are by far the dominating tourist group and probably will define the future of the real estate market.
According to statistics (Wikipedia) Thailand has more Chinese tourists than those from all the ASEAN Countries combined and far more than those from the top 10 Western countries plus Russia. The latter had been on top of this group of 11 since 2011, followed by the US and Australia.
Interestingly the decline of the “Western” tourist that we might see in daily life cannot be proved by statistics. From 2011 to 2017 the arrivals from this group of 11 went up by nearly 38% and the number of Russian tourists will reach the “Pre-Crimea” level this year (proving that the dip was actually quite short lived). Number 11 of this group is Switzerland when it comes to the total number of arrivals but if you calculate this in relation to the total population – Switzerland should really be number TWO! As approximately 2.5 % of all Swiss visited Thailand in 2017 (compared to 0.7-0.8% of Russian and Chinese). Number ONE of this group is Australia (3.5%), third is the UK with 1.5%.
We all know that the Russians initiated the property boom in Pattaya:
Russian tourist arrivals came from less than 200 thousand in 2006 to a peak of nearly 1.8 Million in 2013, then came the Crimean crisis and the number halved within 2 years only to rise again for the last 3 years.
The Ruble lost half of its value to the Thai Baht, so holidays and properties doubled in price for Russians. Nearly overnight the Russian buyers completely disappeared.That was an enormous danger for all the developers such as: Nova, Tulip, Matrix and Heights Holdings, as Russian accounted for approximately half of their buyers.
Everybody was expecting a crash like those in the US or Spain but it did not happen. The monthly or quarterly payments for the condos under construction doubled in Ruble with the result that most buyers had to reduce their stage payments in Thai Baht resulting in a delay of most projects and stressing the cash-flow of the developers.
The brokers and agents saved Pattaya!
Credit for this “soft landing” has to be given to the real estate industry in Pattaya – yes, the agents and brokers saved Pattaya!
Thousands of contracts for off-plan condos were sold to foreigners of the other 10 countries mentioned above. Almost all projects were completed, better late than never! We at Siam Properties had also depended on Russian buyers and within weeks we switched from selling to Russians, to selling from Russians.
You can imagine how many good deals were made with big discounts for the customers who took over but most sellers did not lose in Ruble either as the lower exchange rates now worked in their favor. A smaller selling market alongside the Russian one developed with UK customers, caused by the weakness of the pound, with a smaller impact.
The next boom
No matter what you sell and where or what you produce, it seems to me that our planet does not rotate anymore without China.So it seems to be natural to call for the Chinese to initiate the next boom. But what are the reasons for that?
The total population of China is about 10 times that of Russia
Tourist arrivals are about 8 or 9 times higher
Remember the “0 Dollar Tourism”? The Russians started coming with package tours (all those buses!) before they traveled individually
China is not a “gas station masqueraded as a country” (the late Sen. John McCain about Russia), the Chinese economy is much more diversified
Both countries are ruled by an autocratic regime with few rights for the individual, so having assets outside the country is part of a secure investment strategy
The weather! Surely the average temperature in China is higher than in Russia but none of them can beat Thailand when it comes to weather
The Chinese government is heavily investing in infrastructure projects in Thailand, something Russia never did
9 Million Thais have Chinese ancestors (14% of the population), making Thailand the home of the largest overseas Chinese community in the world.
Changing the laws
On the internet you can already find speculation that the Chinese will not only replace (and outnumber) the numbers set by the “Russian Boom” but because of their government's involvement and the cultural and ethnic similarities ownership rights will be changed in favor of foreigners, mainly the “Foreign Quota” of condos or land ownership.Reasons are surely there and even though there has been similar speculation before during the 23 years I have been living in Thailand, I now have to admit that conditions have never been as good as they are now.
I will be happy to enjoy the boom and hope to maybe enjoy getting better ownership laws as a bonus.