EXCLUSIVE: Real estate agents and developers in many of Thailand’s resort property markets will know this already – Russian buyers and investors have mostly disappeared from the Kingdom.
This statement also matches the results of a survey by international real estate broker Tranio that looked at Russian and CIS buyer habits after the ruble currency crash, and surveyed a mix of 500 real estate agencies and developers,
The research included Russians and Russian-speaking buyers, as well as CIS countries like Kazakhstan as they are often considered one and the same by agencies. CIS countries have been hit with the same currency problems due to their close economic trade tied with Russia and similarly weak commodities markets.
All of the 500 respondents reported a decline in property transactions with Russian-speaking buyers.
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Budgets, for those actually buying, were also down with 67 percent reporting that the average budget declined with the average residential budget residential for 2015 reported as €89,000 per property on average (THB 3.5 million), some 20 percent less than the overall local average budget in Thailand according to Tranio.
In the preliminary 2015 research report from the company, property in Thailand is now reported to be in the ‘medium’ price category, sandwiched between Spain and the Czech Republic. In the 2014 research report Thailand was viewed a ‘low’ priced country alongside Bulgaria and Turkey.
It also noted that in 2014 half of all of Russian-speaking property buyers rented out their properties, and in Thailand expected 10 percent yields or more.
Perhaps more worrying for Thailand’s property and real estate industry is that Russian online searches for property in Thailand declined by 26 percent year-on-year during 2015.
The report noted: “Both internal and overseas property investments have suffered from the economic turmoil, and Russian investments in foreign property were halved by Q2 2015.
“Commercial property in expensive destinations, and cheaper real estate markets, are now the primary target for this new generation of Russian and CIS buyers.”
George Kachmazov, Managing Partner at Tranio, admitted that Russian buyers are still buying a little bit in Thailand.
He said: “We are still getting enquires and have made sales this year, but there are 50 percent less residential buyers this year which is certainly correlated with the ruble crashed.
“Russians are earning rubles but buying and owning property comes with costs in dollars and Thai baht. This is the simple reason why there will be less buyers for residential property in 2016.”
Interestingly Kachmazov noted there are more Russian buyers for commercial property because, he said, they want to diversify away from risks related to the local economy.
“Russian–Thai agencies and developers need to focus on buy-to-let schemes to keep Russian buyers active in 2016.
“Often they buy property to let in the same place where they own a personal home in Thailand.
“If I could give local sellers any advice to see out the tough times, have a look back through previous clients from Russia and offer them investment property options.”
He concluded by saying that most foreign buyers don’t have the time to manage their overseas real estate investment, so they are attracted to simple investment schemes.
“Don’t try to sell added-value projects, rather a rental property with 5 percent guaranteed income per year might seem quite attractive to them,” he said.