scandinavian property investment in thailand 2008 by colliers international thailand

MarketResearchTHE SWEDISH-THAI PROPERTY GOLD RUSH | APR IL | 2008

S c A n D I n Av I A n P RO P E RT Y I n v E S T M E n TI n T H A I L A n D

c o l l i e r s i n t e r n at i o n a l | t h a i l a n d

the sWedish-thai ProPertY Gold rUsh • The increasing interest of real estate f rom the Scandinavian market is directly connected to theupsurge in tourism toThailand.Thailandwould beanidealcountrywithitswarmclimatealongwithlowcostsforlivingandlabor.

• ThenumberofScandinavianvisitingThailandcomparedwiththetotalnumberof Scandinavianpopulationrepresentsthehighestpercentageswhichis3.08%.

• ThemajorityofScandinaviantouriststravellingtoThailandarefromSweden, followsbyFinland.

• TheincreasingnumberofScandinaviantravellingtoThailandin2006&2007 representedby32%&17.4%respectively.

• NorwegianhasthelongestaveragelengthofstayinThailandwithmorethan16.42 days,followsbySwedishwith16.20days,Danishwith14.81daysandFinland with14.11days.

• The number of Scandinavian records peak numbers inDecember, January andFebruary. Therebound isgenerally strongagain inOctoberandNovember.

• ThepopularAndamanSeabeachresortsofPhuket/Khaolakremaintheprime destinationamongScandinavianvisitors.

• ThehighestprojectsalesvalueofThai-ScandinavianjointventureisinRayong whichisapproximatelyTHB4.8billion,represents29%oftotalThai-Scandinavian jointventureprojectsalesvalue.

• Rayong showshighest interest for Scandinavian developers since its secure area,neartoBangkok,notraffic,nopollutionandexpectedincrease inproperty.

• Endusershavechosentobuycondominiumasasecondvacationhomebecauseofits convenienceandcompletedfacilitiescomparedtovilla.

• GlenAsia&LogansaretheleadingrealestatecompanieswithScandinavianmajority shareholding,withtheirprojectsareconcentratedinRayong.

• DemandforThaipropertybyScandinavianisspreadingtoPhuketandKohSamui sincethesetwolocationsareveryattractivetourismdestinationsforScandinavians. ThistrendisbeingsupportedbyflightchartersthatbeganinDecember,2007andare runningthroughApril2008,thepeaktravelseasonfortheoutboundScandinavian market.

Market indicators

2007 2008F

sUPPlY

deMand

take UP rate

aVeraGe sellinG Price

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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.

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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand

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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.

Scandinavian, especially Sweden, is themost interestingcountry inattracting theirpopulation to travel toThailand as thiscountryhasthelowestofGiniIndexofincomedistribution.TheGini index is themostcommonmeasureof incomeinequality. It isconstructedsothatzerocorrespondstoperfectincomeequalitywhichreferstoeveryonehasthe same income,while100corresponds toincomeequalitywhich isonepersonhasallthe incomewhile everyoneelsehasnone.Themedianvalueof theGini indexacross

theworld’scountries is39.Greater incomeinequality isassociatedwithweakenedsocialcohesionandworsehealthstatus.TheGiniIndexofSwedenisat25whichrepresentthelowestnumberasyoucanseeonthebelowchart:

Source : World Bank, World Development Indicators, May 25, 2007

0 10 20 30 40 50 60 70

country

number

Bolivia (2002)

Zambia (2004)

china (2004)

Mexico (2004)

United states (2000)

Burkina Faso (2003)

isarel (2001)

india (2004)

Ukraine (2003)

sweden (2000)

Figure 1 : the Gini index of some selected countries

60

51

47

46

41

40

39

37

28

25

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Despite, the scandinavian tourists visiting Thailand comprised only 5% of total international tourists in 2007, it is noticeable that the number of Scandinavia visiting Thailand represents 3.08% of total Scandinavian population in the year 2007.


toUrisM indUstrY FroM scandinaVian

Official figures fromtheTourismAuthorityofThailand(TAT)revealedthatthenumberof tourist arrivals toThailand for theyear2007hasshownthefigureabout14.5million

persons. Scandinavian tourist arrivals toThailand represent about 5%of the totalinternationaltouristarrivaltoThailand.

Despite, the scandinavian tourists visitingThai land comprised only 5% of tota linternationaltourists in2007.Ifwecomparethenumberof touristsvisitingThailand ineachregionwiththetotalpopulationofeach

region, it isnoticeable that thenumberofScandinavia visitingThailand represents3.08%oftotalScandinavianpopulationintheyear2007.


the nUMBer oF toUrist arriVals to thailand BY reGion coMPared With total PoPUlation in each reGion:

RegionNo. of travellers

visiting Thailand in 2007

Total Population

In mid 2007

% of visiting Thailand

from total population

east asia 7,981,205 2,055,000,000 0.39%

other europe 2,932,036 793,500,000 0.37%

scandinavian 757,734 24,600,000 3.08%

the americas 817,564 563,800,000 0.15%

south asia 685,574 1,498,100,000 0.05%

oceania 731,283 115,500,000 0.63%

Middle east 453,891 115,500,000 0.39%

africa 104,941 54,700,000 0.19%

14,464,228 5,220,700,000 0.28%

Source : Immigration Bureau, Police Department & Population Reference Bureau

Source : World Bank, World Development Indicators, May 25, 2007

0 10 20 30 40 50 60 70

country

number

Bolivia (2002)

Zambia (2004)

china (2004)

Mexico (2004)

United states (2000)

Burkina Faso (2003)

isarel (2001)

india (2004)

Ukraine (2003)

sweden (2000)

Figure 1 : the Gini index of some selected countries

60

51

47

46

41

40

39

37

28

25

Source : Immigration Bureau, Police Department

Figure 2 : the number of tourist arrivals to thailandfor the year 2007

africa104,941

1%

Middle east453,891

3%oceania731,283

5%south asia685,574

5%the americas

817,5646%

scandinavian757,734

5%

other europe2,932,036

20%

east asia7,981,205

55%


The number of Scandinavian tourist arrivals Thailand showing a positive growth rate of 17.4% to 757,734 persons in 2007 from just 645,361 persons in 2006.


From data obtained from the TourismAuthority of Thailand (TAT) which isillustratedbelowgraph, it iscleartoseethatthenumberofScandinavian touristshavebeenontheincreaseyearlybetween2003and2007.ThenumberofScandinavian tourist

arrivalsThailandshowingapositivegrowthrateof17.4%to757,734personsin2007fromjust645,361personsin2006.TATStockholmhasforecastedatotalof730,000visitorsfromScandinaviantravellingtoThailandby2007.

Themajority of Scandinavian touriststravellingtoThailandarefromSwedenwhichisover374,000personsby2007, followsbyFinlandwithapproximately138,332personsin2007.However,thereisapositivegrowthrateoftouristsfromScandinavian. Thailandcontinues to remain the top long hauldestinationforScandinavianvisitors.Variousconsumerpolls inNorwayandSweden see

Thailandbeingregularlyvotedas travellers’favorite tourist destination.According tothe2007annualreader’ssurveyonoutboundtravelorganizedbyResMagazine,thesecondmostpopulartravelmagazineinSweden,theSwedish traveller’s loveThailand isnever-ending.

Figure 3 : the number of scandinavian tourist arrivals tothailand between 2003 and 2007

300,000

100,000

02003 2004 2005 2006 2007

200,000

400,000

500,000

600,000

700,000

800,000


Year

no. of tourists

425,502

462,617489,167

645,361

757,734



The majority of Scandinavian tourists travelling to Thailand are from Sweden which is over 374,000 persons by 2007, follows by Finland with approximately 138,000 persons in 2007.


Fromtheyear2007comparingtotheyear2006, it is seenthatthenumberoftourists fromScandinavianhaveincreasedinallfourcountries.

150,000

Figure 5 : the number of scandinavian tourist arrivals to thailand in 2007 compared with 2006 by country

50,000

0

100,000

200,000

250,000

300,000

350,000

400,000

2006

Period

2007

denmark

norway

sweden

Findland


Period

no. of tourists



150,000

Figure 4 : the number of scandinavian tourist arrivals to thailand between 2002 and 2007 by country

50,000

0

100,000

200,000

250,000

300,000

350,000

400,000

denmark

norway

sweden

Finland

Quarter

no. of tourists

2002 2003 2004 2005 2006 2007


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.

ItisinterestingtonotethattheaveragelengthofstayinThailandhasincreasedyearonyearfor4countriesofScandinavian.NorwegianhasthelongestaveragelengthofstayinThailandatmorethan16.42days in2007, followsbySwedishat16.20days,Danish14.81days,and

Finland14.11days.ThetrendoftheaveragelengthofstayforScandinaviantouristskeepsincreasingsince2003to2007.

The tourism sector is also affectedby theseasonal changes in tourist arrivals. Fromempiricaldata, thenumberofScandinaviantourist’s recordspeaknumbers inDecemberandstartstodeclineinJanuaryandFebruary.ItthendeclinesandplateausinMaytoAugust.Thehigh season recommences inOctober

andNovember.Thechartsbelowhaveshownmonthly seasonalitychangesbetween2006and2007.



14.00

Figure 6 : average length of stay of scandinavian tourist arrivals to thailand between 2003 and 2007 by country

13.00

12.50

13.50

14.50

15.00

15.50

16.00

16.50

17.00

2003 2004 2005 2006 2007Year

days

denmark

norway

sweden

Finland


60,000 60,000

Figure 7 : total number of scandinavian tourist arrivals from each country tothailand by month in 2006 and 2007

20,000 20,000

0 0

40,000 40,000

80,000 80,000

100,000 100,000

120,000 120,000

140,000

Janua

ry

Janua

ry

Febr

uary

Febr

uary

March

March

april

april

May MayJun

eJun

eJul

yJul

y

augus

t

augus

t

sept

embe

r

sept

embe

r

novem

ber

novem

ber

octo

ber

octo

ber

decem

ber

decem

ber

Year

2006 2007

Year

no. of tourists

no. of tourists

denmark norwaysweden Finland



The sharp decline in visitors to Phuket in 2005 is directly attributable to the 2004 tsunami aftermath. However, the market bounced back quickly and maintained its upward trend in 2006.


150,000

300,000

Figure 8 : Four popular tourist attractions of scandinavian tourist arrivals to thailand between 2002 and 2007

50,000

0

100,000

200,000

350,000

250,000

400,000

450,000

2002 2003 2004 2005 2006 2007

Phuket

samui

Bangkok

Phang nga

Source : Tourism Authority of Thailand (TAT)

Year

no. of tourists

ThepopularAndamanSeabeachresortsofPhuket/KhaoLakremaintheprimedestinationamongScandinavianvisitors.However,asthepercentageofScandinavianrepeatvisitors isabout62percent,TAThasorganizedtouroperatorsandmediafam.tripsinanattempttoofferalternativedestinationsaroundThailand.ThesharpdeclineinvisitorstoPhuket in2005isdirectlyattributabletothe2004tsunamiaftermath.However,themarketbouncedbackquicklyandmaintaineditsupwardtrendin2006.

ThelargestprovinceoftheSouthlocated685kilometres fromBangkok,SuratThani(oftenknownasSuratinshort)isaperfecthideawayforEuropeanvacationersseekingarelief fromtheharshwinters.ItisactuallythemainlandjumpingoffpointforKohSamui,Thailand’sthirdlargestisland,anditsneighborKoPha-ngan,acelebratedislandhoststhebiggestbeachfullmoonparty.TheTATisalsohopingtoencouragetraveltoChumphonandRanong,aprovincewithhighpotentialgivenitswealthofnaturalresourcesandpristinelandscape,especiallythenaturalhotspringsforwhichtheprovinceisknown.


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Scandinavian village rolled out the carpet for Scandinavian investors and created an interest for living in Thailand.

real estate BUsiness oF scandinaVian in thailand

Recently,SwedishhasturnedtoThailandforinvestmentinrealestatebusinesswhichisclassifiedbythebusinesstypeinthebelowtable:

Swedishisinterestedinrealestatebrokerageaswecannoticethatthereare73Swedishregisteredcompanies inThailandwith investmentaround43.20millionbaht, followsbyconstructionbusinesswhichrepresents51Swedishregisteredcompanieswithinvestmentof27.82millionbahtinThailand.ThemajorityofSwedishInvestmentisinRayongProvince,represents34.13millionbahtor45%oftotalSwedishinvestmentinThailand.

TheScandinavian registered capital inRayongProvince is approximatelyTHB132.33millionfrom39registeredcompanies.ThehighestregisteredcapitalcomesfromNorwaywithapproximately40.80millionbaht.However,theregisteredcapitalofScandinavianCountriesinThailandhasindicatedlessdifferentregisteredcapitalamong3countrieswhichareNorway,DenmarkandSweden.

SUPPLY

Thepioneerproject,launchedbyaSwedishinvestorbackin2003andinitiallyintendedasa55+membershipestateforretireeswithfullonsitefacilities,wasinfacttheonewhichpavedthewayfortheScandinavianpropertymarket’sfastexpansioninThailand.ScandinavianvillagerolledoutthecarpetforScandinavianinvestorsandcreatedaninterestforlivinginThailand.

ThenumberofresidentialunitdevelopedbyScandinavianshowsthehighestnumberofunitinRayong,with809residentialunits,followsbyHuaHinandPattaya,withrepresent468and259residentialunitsrespectively.

the sWedish coMPanY reGistered 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 13,302 43.20 386,588.26

3 Property Management 1 15 0.02 214.09

4 land development 2 1,277 2.76 41,177.97

5 civil engineer 2 3,274 1.89 20,919.24

6 retail 2 692 0.49 24,825.60

Total 131 71,212 76.18 705,680.29

Source : Department of Business Development, Ministry of Commerce


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There are a good combination of villa and condominium in Rayong, however the number of condominium units in Rayong is higher than villa.


300

Figure 9 : the number of residential units developed by scandinavian investors in each location

1000

200

400

500

600

700

800

900

location

Source : Colliers International Thailand Research

no. of units

137

809

4037

259

468

80138

60

195

Bang

saen

rayon

g

koh c

hang

Patta

ya

hua h

in

ranon

g

koh la

nta

koh sa

mui

Prac

huap

kiri

kan

Phuk

et

ThereareagoodcombinationofvillaandcondominiuminRayong,howeverthenumberof condominiumunits inRayong ishigherthanvillaastherewillbeanothernewproject

ofGlenAsiawhichwillbestartedconstructionbytheendof2008,withtheapproximately180units.

150

300

Figure 10 : the number of residential type developed by scandinavian investors in each location

50

0

100

200

350

250

400

450

500

Bangsaen rayong koh chang Pattaya hua hin ranong koh lanta koh samui Prachuapkirikan

Phuket

supply of villa (unit)supply of concominium (unit)


location

no. of units

137

456

353

0 0 0 0 0

60

179

16

80

138

37

160

99

176

292

40


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.



ESTIMATED SALES VALUE OF THAI-SCANDINAVIAN JOINT VENTURE PROJECTS CURRENTLY MARKETED BY LOCATION

Thehighest salesvalueofThai-Scandinavian jointventureprojects is inRayongwhich isapproximatelyTHB4.8billion,represents29%oftotalThai-Scandinavianjointventureprojectsalesvalue,followsbyHuaHin,represents25%andKohSamui,represents13%.

BelowcharthasshowntheestimatedsalesvalueofrealestatebusinesscurrentlymarketedbyThai-ScandinavianjointventureineachlocationinThailand:

DEMAND

EarlierpeopleofthesecountriesgenerallyboughtresortpropertiesinSpainandFrancebutoverthepastthreetofouryears,asidefromThailand,theyhavesnappeduprealestateinTurkeyandBulgariabutinvestmenttotheformerhasnowdroppedoff.Today,morelikelyThailandisoneverybody’s lips.ThailandsurelyhasalongwaytogobeforereachingthehighnumberofScandinavianhomeslikeinSpain.WhatisperhapssignificantlydifferentisThailand’senormouspopularity–despitethemuchlongertraveldistance–andthespeedwithwhichthepropertymarketisdeveloping.ThesurgeinbuyersfromScandinaviaacquiringretirementandholidayhomesherearepossiblyoutnumberingSpainbynowasitsallurewearsoffduetorisingcosts.Endusershavechosentobuycondominiumasasecondvacationhomesinceitismoreconvenientforthemaswellastherewillbecompletedfacilitiescomparedtovilla.Also,theywillhavecommunityamongtheircountries.

Recently,thefactorinpropertyselectionofScandinavianisconcerningaboutthedistancefromBangkokasit isnoticeablethatthegoodtakeuprateofpropertyis inRayong,BangsaenandPattayawiththeircloseproximitytoBangkokwhichisabigadvantage.Itisjust45minutestoBangsaen,1andahalfhourtoPattaya,and2hourstoRayongfromSuvarnabhumiInternationalAirport.However,HuaHinpropertygrowth just starts totakeoff,benefiting fromitscloseproximitytoBangkokandaprestigiousroyalhistory.LocatedonthesoutheastshoreofThailandabout230kmsouthofBangkok,ithasbeentheThairoyalfamily’sholidayretreatsince1928,andHisMajestytheKingresidestheresometimes.

Themaindevelopers in theareaRayongandPattayaareGlenAsiaandLogansThailandCompanyLimited.However,therearemanyScandinaviandevelopers inHuaHinwhichareLogansThailandCompanyLimited,SierraProjectandNaturalValleyEstate.


Figure 11 : estimated sales Value of thai-scandinavian Joint Venture Projects currently Marketed by location

rayong4,79129%

Bangsaen6854%

Phuket1,73111%Prachuap kirikan

1981%

koh samui2,07013%

koh lanta6004%

ranong1801%

hua hin4,10525%

Pattaya1,55010%

koh chang2842%

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Project pricing of Scandinavian-investedprojectscoversawiderange,withthelowestper squaremetreprice fora residentialunit

being foundinBangsaenandthehighest inKohSamui.

the aVeraGe Price Per sQUare Metre BY location

locationaVeraGe Price ranGe

thB / sQM

Bangsaen 29,412 - 67,144

rayong 38,256 - 85,000

koh chang 74,000 - 98,000

Pattaya 38,000 - 95,000

hua hin 66,000 - 80,000

koh lanta 40,000 - 60,000

koh samui 125,000 -130,000

Prachuap kirikan 43,000

Phuket 77,000 - 106,000


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.




267 oFFices in 57 coUntries on 6 continents

Usa 95 canada 17latin aMerica 17 asia PaciFic 53 eMea 85

Us$1.6 Billion in annUal reVenUe 673 Million sQUare Feet Under ManaGeMent 10,171 ProFessionals

contact inForMation

thailand: BangkokPatima Jeerapaet Managing DirectorColliers International17/F Ploenchit CenterKlongtoeyBangkok 10110Tel: 662 656 7000Fax: 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.

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oUtlook

Scandinavians inrecentyearshavebeenactive investors inThaiproperty.SwedishhomebuyersinthehundredsarespearheadinganincrediblystrongandgrowingNordicpropertyboominThailand.WhatisclearisthatthetrendofowningpropertyandretiringoverseasisgoingtogrowinThailandasthepreferredlocationinAsia.Moredevelopersaretargetingretirees,whoareconsideringstayingherepermanentlyorseasonally,aswellvacationpropertyinvestors.Thailandiswell-positionedasawell-recognizedtouristbrand.

However,webelievedthatthedemandforThaipropertybyScandinavianisspreadingtoPhuketandKohSamuisincethesetwolocationsareveryattractivetourismdestinationsforScandinavians.This trend isbeing supportedby flightcharters thatbegan inDecember,2007andarerunningthroughApril2008,thepeaktravel seasonfortheoutboundScandinavianmarket.


Our Knowledge is your Property

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This report and other research materials may be found on our website at www.colliers.co.th 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.

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