China’s Bri and Chinese Investment in Thailand’s Residential Property Market: What are the Linkages?
When assessing the impact of China’s Belt and Road Initiative (BRI) on the development of the real estate market in Thailand there are numerous factors that have to be considered. First and foremost it has to be recognized that the BRI is not simply about China attempting to geo-politically out maneuver mature economies in the world: this is a simplistic generalization that is not evident in the pronouncements of China Rather China seeks to actively promote international cooperation through policy initiatives, infrastructure development, trade growth, financial support and people-to-people development. Thus, the overarching objective of BRI is to construct a new platform for international cooperation to create new drivers of international development. Within this broad context it is possible to analyze whether BRI is driving the demand for real estate investment in Thailand – one of the ASEAN countries that has bought into the BRI – is causally linked to BRI or there are a number of other factors that are driving this demand. It is also important to analyze whether this demand that has increased exponentially since 2015 is in all fields of real estate ranging from investment natural resources, notably agricultural and forestry through to commercial and residential property investment. It is also important to differentiate between investment by Chinese companies and Chinese individuals with disposable income. Furthermore, it is also important to differentiate between investments that are or potentially growing both the economies of China and Thailand and those investments that are growing the personal wealth of individuals even if the two issues are inter-related. The major argument being made is that while the BRI has undoubtedly and will continue to drive investment in Thailand’s real estate development, especially through the development of the Eastern Economic Corridor (EEC) which is largely linked to Thailand’s own 4.0 Policy reflected in its National Economic and Social Development Plan (2017-2036) and the high speed rail link from Kunming to Singapore, this alone does not explain the interest of China or rather some/many of its people in Thailand’s real estate. The focus here will be on residential real estate and its drivers. These drivers include the cultural impact of movies such as “Lost in Thailand”, the favorable exchange rates between the Chinese Yuan and the Thai Baht, China’s growing “middle class” and disposable income, ease of acquiring some types of residential property in Thailand compared to other markets, lack of serious overt cultural opposition to Chinese in Thailand, and the fact that Thailand as a largely tropical country offers opportunity close to China that markets elsewhere do not. It will be argued that Chinese investment in Thailand’s residential property market will continue because the Government of Thailand wants it to continue but if there is a slowdown this is because of factors external to Thailand. Indeed, this Chinese investment is to some extent contributing to a reduction in over-supply of recently built condominiums and town-houses in Bangkok but also in Pattaya, Phuket, Koh Samui and Chiang Mai. To date there has been little interest by Chinese residential real estate investors elsewhere in Thailand although it is possible to conclude that with greater BRI supported infrastructure development and the growth in industries ranging from robotics to Thailand as a medical hub this is likely to change. However, it also importantly argued that nowhere in Thailand will the property market be over-run by Chinese investors as a result of BRI unlike for instance the Eastern Coastal Region of Cambodia from Koh Kong to Kampot. The reason being is that Thailand is far less reliant on Chinese investment than Cambodia.