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Thailand: Thailand

Guide to the Risk and Opportunity Ratings

At the end of each country profile, we have given a risk rating and an opportunity rating. These ratings are a summary of our analysis indicating the levels of risk when investing in a market and the level of opportunity to profit from it.

The ratings themselves are simple. Both work on a scale of one to five. The opportunity rating is indicated by the $ symbol. A single $ equals a low opportunity whilst 5 of them ($ $ $ $ $) equals the highest opportunity ranking.

For risk we have used the * symbol. A ranking of * equals a low risk rating whilst * * * * * equals a high risk rating.

Introduction

Situated at the heart of Indo-China, Thailand has elements of all the characteristics commonly associated with Asia. Covering an area of over half a million square kilometres and with a north-south distance of 1,860km, the country is also one of the most diverse in the region in terms of geography and climate. From high mountains in the north to hundreds of islands in the Malay Archipelago to the south, with river deltas, plateaux and valley systems as well as innumerable stunning beaches and cities teeming with culture and colour, Thailand offers an enormous range of attractions which draw visitors back year after year. The local people are renowned for their friendly nature – Thailand is regularly listed as one of the safest countries in the world – and the Thai cuisine and local specialities make any visit full of flavour and charm. Today, Thailand is by far the most popular holiday destination for westerners in South East Asia, and is sometimes known as the ‘Spain of the East’.

Known as Siam until 1939 and as a growing economy in the latter years of the 20th Century, Thailand has attracted significant foreign investment and has become one of the Asian Economic Tigers. Thailand is a dynamic free market state which encourages foreign investment, and, to an extent, foreign residents, and has established itself as one of the fastest-growing economies in the region. The country’s cheap workforce and comparatively high level of education have made it an attractive destination for overseas investors who are further inspired by Thailand’s stability and increased internal consumption. Although some mainly agricultural areas of the country are still relatively impoverished, Thailand is far more prosperous than most of the countries in East Asia; of its neighbours, only Malaysia enjoys a greater GDP per capita, and Thailand equals most, and surpasses some, of the Eastern European markets in those terms.

For those investing in Thailand, there are two key drivers behind the property market: domestic economic growth, and tourism. As previously stated, Thailand’s economy is now one of the most stable in the area, and the expectation is that this economic development will contribute to a general upward trend in property prices. Increasing tourism is also contributing to the investment trend, with people buying property in Thailand specifically for investment, to exploit the busy holiday rentals market (with a long-term view of capital appreciation), or for personal use as a holiday or retirement home.

Is this a good place to buy?

Thailand is the most popular tourist destination in South East Asia, with some of the finest beaches in the world. It has a tropical climate, is rich in cultural heritage, and is widely known as the ‘land of smiles’, very friendly and extremely safe. The economy and the people are highly resilient, reflected in the extremely rapid recovery shown after the Tsunami (local councils are in fact taking the opportunity created by the disaster to rebuild in a more structured manner, with resorts planned rather than accreted). The country has strong business links with China, the fastest-growing economy in the world, and has an excellent infrastructure and world-class facilities in many resort towns.

The best aspect of property development here is that Thailand is still relatively undiscovered as far as westerners are concerned. Although the country probably won’t entirely catch up with the established European markets, it is growing very quickly and strongly. There is great rental potential, due to the ever-expanding tourist market, and demand is growing, supported by increased government spending on marketing, a burgeoning tourist industry, the attractions of the people and the geography of the country. On top of this, there is no capital gains tax for private investors and very low ongoing costs.

Price history

It would seem to be a given that the Tsunami would have had a serious effect on Thailand, and although recovery was quick, serious damage was done to the tourist industry. Much of this damage was due to the media coverage of the event and to tourists wanting to be sympathetic and allow time for recovery, and figures released by the Pacific Asia Tourism Association in August 2005 show that arrivals dropped by 40% in that year. With tourism representing 6% of the country’s income, the Tsunami could therefore cost Thailand over a billion dollars in lost tourist revenue. Surprisingly, these effects were not reflected in the property market, and local real estate agents were still making sales the day after the disaster. Developers had such confidence in the market at the time that those hoping to get discounts because of the Tsunami were disappointed. Property prices are currently rising at between ten and fifteen percent a year in Thailand – and although this is a slower rate than in some other emerging markets, it promises a steadier, more settled future.

More pages

Page 1: Guide to the Risk and Opportunity Ratings
Page 2: Which type of property should you go for?
Page 3: Purchase Process

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