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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 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.
The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand
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.
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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%
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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.
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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
Source : Immigration Bureau, Police Department
Year
no. of tourists
425,502
462,617489,167
645,361
757,734
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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.
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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
Source : Immigration Bureau, Police Department
Period
no. of tourists
The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand
Source : Immigration Bureau, Police Department
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
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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.
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Source : Immigration Bureau, Police Department
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
Source : Immigration Bureau, Police Department
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
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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.
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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.
The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand
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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.
The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand
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)
Source : Colliers International Thailand Research
location
no. of units
137
456
353
0 0 0 0 0
60
179
16
80
138
37
160
99
176
292
40
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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.
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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand
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.
Source : Colliers International Thailand Research
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
Source : Colliers International Thailand Research
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.
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The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand
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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.
The Knowledge Report | April | 2008 | Scandinavian Property Investment in Thailand