Restrictions placed in Australia is resulting in increased Chinese interest in Thailand.
It is certainly not new news that the Chinese investors are purchasing property in Thailand. Often choosing the Kingdom for a variety of reasons such as the promising returns on offer plus the attractive price point. However there is a renewed appetite from the Chinese. This is believed to be a result of restrictions introduced in Australia to curb overseas investors from purchasing property.
Australia has become a popular investment destination for the Chinese because many want property for their children to reside in whilst studying in the country. Additionally they wish to spread their investments across a variety of assets. Hence Australia’s stability and security nature is attractive.
New taxes
However measures introduced to deter overseas investors have had an effect with Chinese investors moving their sights from Australia to Thailand. The state of Victoria, which includes the popular buzzing city of Melbourne, has taken action to aid the slowdown the activities of international investors. Until the 1 July there was an exemption of stamp duty for any off-plan property. This has now been abolished. Plus in 2016 overseas purchasers have been stung even further with a hike in stamp duty from three to seven percent.
In New South Wales, home to Sydney, a similar pattern has emerged. Foreign purchasers have to pay 8 percent tax on property purchases. Additionally the annual land tax for overseas investors has increased from 0.75 percent to 2 percent. This comes as a result of international investors being cited as a key driver in rising property prices in Sydney where since in 2009 prices have doubled.
The federal government has also taken action implementing a ‘ghost tax’. This annual fee of AUD 5,000 will be levied on any property that is left empty for a period of six months or more. The aim is to discourage investors from buying property as a means to park their money rather than to live in. In turn it is hoped that it will ensure that locals are still able to afford to buy property. The funds raised from these taxes will then be injected back into the market. Used to help build affordable housing and also to assist first time buyers to reach the first rung of the property ladder.
Thailand to reap the rewards
As many Chinese investors turn away from Australia in a response to these rising taxes, more are setting their sights on other destinations. Consequently Thailand has received more attention. As a result we expect to see a rise in the number of transactions in the kingdom from Chinese investors going forward as their enquiry levels have already increased.