BANGKOK -- Beijing native Bobby He has a dozen Chinese friends who own condominium units across Thai hot spots such as Bangkok, Phuket and Pattaya.
"Some even bought three units at the same project," he said. "They plan to retire in Thailand, so one unit is for self-stay while the other two are to rent out to support retirement life."
Though property in Thailand seemingly offers an attractive bargain for Chinese buyers compared with their home market, these Thai investments are plunging in value as the coronavirus pandemic hammers the global economy.
The Beijing native said he even heard of a Chinese investor who spent 3.8 million baht ($121,000) on a condo unit in the outskirts of Bangkok, only to learn that the developer recently slashed prices to below 3 million baht.
It is no secret that Thailand's residential market depends heavily on Chinese investors, who became the biggest source of tourism income in recent years thanks to the kingdom's proximity to China, its cheaper cost of living and pleasant weather.
Mainland China and Hong Kong accounted for 43% of the 92.16 billion baht transferred from abroad by all foreigners to buy condo units in Thailand in 2018, according to the Bank of Thailand, the country's central bank. The U.S., Singapore, Taiwan, the U.K. and Japan were also among the biggest spenders. Foreigners are allowed to own 49% of a condo project in Thailand, and they are barred from owning landed property.
But Chinese money has ebbed from Southeast Asia's second-largest economy since last year due to a stronger Thai baht and a simmering U.S.-China trade war. The pandemic has rubbed salt in the wound.
Huang Cheng, a native of the southwestern Chinese city of Chengdu, owns several condo units in Bangkok's Wong Wian Yai and On Nut -- two popular rental locations for Chinese Airbnb travelers. Though Huang easily rented out units for at least 1,000 baht before the pandemic, most of his condos now are idle.
Thailand has barred international commercial flights into the country until the end of June. Despite talk of allowing travelers, especially Chinese, into the tourism-reliant country, market observers said tourism activity will not resume until the October-December quarter.
The Tourism Authority of Thailand projected in May that foreign travelers will decline this year by almost two-thirds to 14 million, the lowest number in 14 years. The country hosted a record 39.8 million foreign arrivals in 2019.
Thailand reported slightly over 3,100 confirmed coronavirus cases as of Tuesday, largely bringing the pandemic under control in comparison to neighboring countries such as Singapore, which logged over 38,500 in the same period.
Thailand's property market was depressed by the 1997 Asian financial crisis, regaining momentum only in 2010. Record-breaking investments in condo projects were made in 2012 and 2013, thanks to the government's incentive for first-time house buyers.
From 2010 to 2018, an average of 105,000 new units debuted in Bangkok yearly, according to Bank of Ayudhya's research house Krungsri Research. But sales totaled only about 96,000 units per year, which lifted housing inventory.
As the pandemic hurts the country's economy, Thai developers are adopting various tactics including 50% discounts to entice buyers.
The condo trend "is likely to slow both in terms of supply and demand," said Risinee Sarikaputra, director of research and consultancy at Knight Frank Thailand. She said it is expected to take "another two years for the condominium market to improve."
Around 100,000 units remained for sale in Bangkok as of May, she said.
AP (Thailand), which builds the Aspire condo brand, reported a drop of over 40% in first-quarter net profit from a year ago to 618 million baht. Revenue dipped 31% to 5.4 billion baht.
Rival Sansiri, familiar to overseas buyers for its premium condos, saw a steeper 85% decline in net profit to 62 million baht. The company already felt the pinch last year, when it logged a mere 3 billion baht in total presales from foreign buyers, a plunge from 14 billion baht in 2018.
To increase liquidity as most buyers -- local and foreign -- are expected to tighten their purse strings, Sansiri recently rolled out a "pay early discount scheme" for its luxurious XT Ekkamai project.
The 38-story high rise developed by Sansiri and Japan's Tokyu is slated for completion in December. Buyers who opt to deliver as much as 75% of the outstanding payment can enjoy discounts of up to 12%. That means a 30-sq.-meter unit at the prime location of Ekkamai is now for sale at 4 million baht.
Vichai Viratkapan, acting director-general of the Real Estate Information Center, said the government could devise visa-incentive schemes for foreign buyers if they expedite their transfer of ownership of property. The center is an industry researcher under the purview of the Thai Ministry of Finance.
Thailand doesn't grant foreign property buyers an automatic resident visa. If these people wish to stay in the country, they need to apply for work, investment or retirement visas.
The "Malaysia My Second Home" program in Thailand's Southeast Asian neighbor allows foreigners a 10-year renewable residence visa, provided that they put in a minimum fixed deposit of 150,000 ringgit ($35,170) with a local bank. In October, Malaysia reduced the threshold for foreigners to buy property to 600,000 ringgit, from 1 million ringgit, hoping to ease a supply glut.
Bobby He, who resides in Bangkok, is taking a more cautious approach. He currently invests in only one property, where he plans to stay with his partner upon completion over the next two years.
"It's better to be safe than sorry," he said. "Doing homework is critical."