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EMERGING MARKETS PRODUCE NEW INVESTORS FOR THAILAND

A new breed of buyer is starting to emerge and developers need to be on the ball Bangkok Post/Raimon Land Feb 22, 2009 There is no getting away from the tough economic times all developers and investors are experiencing. There are no definitive timelines or answers, even from the major economic summit at Davos recently, as to when the present downturn will cease. While the prevailing feeling is that we are not yet at the bottom, the overall climate is not without optimism. Although we still focus on our core Thai and foreign markets and encourage existing customers to become repeat buyers, we have also seen plenty of activity from less traditional markets. This indicates that more customers outside the conventional client base are developing, where investors who have emerged relatively unscathed by the economic meltdown of recent months are actively pursuing investment opportunities. Recent research reveals that luxury property investors from the UK, the US, Hong Kong, Singapore and Australia still provide a strong foundation for alien ownership. However, buyers from Russia, the CIS countries, mainland China, South Korea, India and other non-traditional markets have been the most lively. Of these, Russia is the most notable, arguably due to the stable wealth of the middle classes, having broken into Thailand's top five nationalities for property buyers last year. This momentum carried over into 2008, a year where we saw a great many Thai buyers purchasing high-end developments. China has also emerged as a top five player with sales almost five times that of 2007. Buyers from India are making inroads with year-on-year sales more than doubling, and the Middle East is turning in numbers approaching those of Russia. Eastern Europeans from Estonia, Belarus, Ukraine, Slovenia and the Czech Republic are becoming important buyers, and reflect the increasing trend for Europeans to purchase second homes outside traditional continental resort destinations. Among non-traditional Western European countries, the Netherlands has stepped forward, with Italy, France and Germany increasing inquiries, as have African countries including South Africa, Nigeria and Zambia. In fact, some Thai developers are reporting these newly emerging markets accounted for a combined 30% or more of their 2008 sales, particularly in resort areas. This new set of investors often hold a longer-term view than those from traditional markets, making them more viable during uncertain times. This pool of investors are less likely to be put off by an economy in recession, and they have confidence in Thailand's ability to bounce back fast. To tap into these emerging markets, developers are embracing a variety of alternative strategies, many of which focus more on individual countries. For example, the rise of Russians and Eastern Europeans as serious investors is grabbing the attention of all developers, but they are finding that traditional marketing strategies are not totally effective. Late last year we established specialty units in Russia and the CIS headed by experienced executives of the same nationality, and it has to date achieved some respectable results. More important than the immediate sales though are the long-term inroads we hope to make in emerging markets and establish a platform for future growth. We are confident this will benefit Thailand as the economic clouds lift and some other developers may consider doing the same and join in promoting Thailand as an upscale lifestyle destination abroad and build this perception in non-traditional source markets. These new departments take into account the market's cultural and language differences, as it is important to serve and communicate with them in the appropriate way. They also prove to buyers that a developer is serious about meeting their needs, growing their investments and building the vital confidence that the developer has the required credentials and track record to ensure delivery of high-quality projects on time and to original specifications. Other tools developers may employ are in-language websites and tailor-made promotions, and preferential payment terms through relationships with international banking institutions. Participating in respected events is another approach that can build credibility and trust. These can offer an excellent audience of potential investors. One we participated in last year was Russia Fashion Week, the largest in Eastern Europe, attended by 40,000 highly targeted invitation-only guests. Holding country-specific property seminars has also proven to be productive in the Russian market, as they offer the opportunity to detail Thailand's investment climate to a group with similar requirements and concerns. Another avenue is forming partnerships with Russian and CIS estate agents, who better know and understand their markets. Tourism numbers, which are closely linked to condominium purchasers, suggest India will become a stronger market, and could require the same treatment. The bottom line is that though traditional markets are not yet saturated, they tend to be more hesitant during uncertain times, while high-wealth investors from new and emerging markets are more active and seek long-term positions. For Thai developers to not only survive the present crises, but to continue to prosper, they must focus more on investors from emerging markets and adjust their strategies to better reach them, while moving strongly back into traditional markets when the economic climate stabilises. Nigel Cornick is CEO of Raimon Land Public Co Ltd

 

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