Thailand may not be an easy place for New Yorkers to reach for the weekend, but more and more Americans are finding the tropical nation an ideal place to invest in real estate.
It’s not hard to see why: White sandy beaches, a solid infrastructure, quality nightlife and relatively cheap prices make it the best place in the region to buy property.
“American institutional investors keep putting money into Thai property,” said Patima Jeerapaet, managing director of Colliers International Thailand. “The number of tourists is increasing every year, and the hotel industry is booming. There is huge room for growth.”
In the past year, CB Richard Ellis (the Los Angeles-based brokerage that is also the largest commercial broker in New York City) opened offices in resort destinations Pattaya and Koh Samui; Jones Lang LaSalle resurrected its dormant residential sales and leasing unit, and Colliers acquired well-reputed Thai firm Pasupat Realty.
In addition, White Plains-based Starwood Hotels announced plans to open the 400-room W Bangkok in 2011, and a new Le Meridien will be Pattaya’s first five-star beachfront resort.
But just as more U.S. investors are expanding in the country, the army-appointed government has sought to tighten foreign ownership laws. That has all but ended freehold sales of luxury villas and soured the overall investment climate.
Although the uncertainty may be hurting sales — Thailand’s Housing Business Association estimated that sales have dropped nearly 20 percent this year — agents say it presents a good opportunity to buy. That’s because prices have been nearly flat since the military coup in September 2006.
Property analysts agree that pent-up demand for Thai property will likely be unleashed after the election scheduled for Dec. 23, pushing up prices in 2008.
“If you can take the risk involved with the new government, it’s better to buy now,” said Phanom Kanjanatheimthao, managing director of Knight Frank Thailand. “Prices will increase a lot if the political situation is stable.”
Property prices had crashed following the Asian financial crisis 10 years ago, causing developers to abandon many unfinished buildings in Bangkok and other places. But afterwards, savvy investors who scooped up beachfront land in Phuket, Koh Samui and Pattaya have seen the value of their property increase between 400 and 500 percent, according to Colliers.
Land in Phuket and Pattaya can now run from $25 to $60 per square foot. This has investors looking to less-developed resort areas like Phang Nga, Koh Lanta or Krabi, where land fetches one-third or one-half the price.
“Investment groups look at these developing places and see that they can make a huge profit of about five times their investment in five years,” said Jeerapaet.