Thai developers urge govt action amid surge of foreign investment

Rise in foreign capital, especially from China, driven by manufacturers and exporters relocating to Thailand

 

Thai property developers are calling on the government to introduce stricter regulations to help small and medium-sized enterprises (SMEs) compete with the influx of foreign developers and investors, particularly from China.

 

This plea comes as the Thai real-estate market grapples with a surge of foreign capital, especially from China, driven by manufacturers and exporters relocating to Thailand. 

 

This trend has intensified in recent years, coinciding with shifts in global trade policy.

 

Board of Investment (BOI) data show that Chinese investors submitted applications worth 146.36 billion baht in the first nine months of 2024. The number of Thai legal entities with Chinese shareholders also rose to 29,913 as of October 31, 2024, with total registered capital of 409.3 billion baht – a 9.82% increase from 2023. This upward trend is expected to continue.

 

This influx of Chinese investment and businesses has led to a corresponding increase in Chinese nationals obtaining work permits in Thailand. As of October 2024, around 41,752 Chinese nationals hold such permits, exceeding all other nationalities. This has made them a significant buying power within the Thai property market.

 

Cushman & Wakefield Thailand forecasts that Chinese arrivals in 2025 will surpass 2024 figures, likely stimulating the Thai real-estate market, particularly for condominiums and detached houses, both for rent and sale. Factors such as positive international relations and evolving trade policies contribute to this prediction.

  

Despite potential repercussions on the Chinese economy, its extensive network of trading partners and the adaptive nature of Chinese businesses are expected to mitigate the impact.

 

Thai businesses across such sectors as tourism, trade, and import-export will need to adapt further to the evolving global landscape, where investment, business, and migration are increasingly difficult to restrict.

 

However, concerns have been raised about the comprehensive nature of Chinese investment in Thai real estate. Chinese investors frequently bring a complete ecosystem, including developers, contractors, engineers, workers, advanced technology, and construction materials – often cheaper and readily available from China.

 

These entities often register as Thai companies, complying with Thai shareholding regulations, but with Chinese nationals in top management positions. This structure could disadvantage Thai businesses.

 


Furthermore, Chinese investors tend to develop housing projects catering primarily to their own community, creating competition for Thai developers, especially near industrial estates, factories, and the Eastern Economic Corridor (EEC).

 



 

Thai entrepreneurs are voicing concerns. Sunthorn Sathaporn, managing director of Sathaporn Estate and president of the Housing Business Association, explained that beyond the sluggish market and reduced purchasing power, Thai developers face intense competition from foreign capital, particularly China.  

 

He pointed out that Chinese developers are entering Thailand to build residential projects for sale, while large Chinese firms are increasingly partnering with Thai developers.
  

Sunthorn also highlighted the lower cost of Chinese materials and the fact that Chinese developers manage the entire process, from investment and construction to sales. He noted the concern of Chinese companies bringing their own construction technologies, engineers, workers, and contractors, leading to faster project completion and market entry.  

 

He then stressed that these cost advantages put Thai businesses, especially SMEs, at a distinct disadvantage. 

 

He urged Thai businesses to adapt and enhance their competitiveness by offering comprehensive services, including sustainable development, ethical practices, and high-quality products. He also advocated innovation and the development of eco-friendly smart-home technologies using Thai resources.

 

Looking ahead, Sunthorn emphasised that continued Chinese capital dominance will require Thai developers to adapt rapidly. While larger developers may be less vulnerable, SMEs need to build their own brands and focus on intensive development, especially shortening construction times to compete with Chinese developers.  

 

Thailand maintains advantages in quality, service and branding, fostering consumer trust, including among Chinese buyers who still favour Thai condominiums. Crucially, businesses should manage cash flow and improve efficiency given the current weakness in domestic purchasing power. 

 

Pornarit Chounchaisit, president of the Thai Real Estate Association, echoed these concerns. He noted that since shifts in US trade policy, Chinese capital flows into Thailand have intensified. Beyond using Thailand as a manufacturing and export base, these groups are acquiring land for real-estate development.

 

He emphasised that Thai businesses and the government need to implement robust measures to address this. He pointed to the rising number of illegal Chinese factories, which the Ministry of Industry is inspecting and closing.  

 

He also mentioned factories competing unfairly by leveraging cost advantages, such as those producing rebar and construction materials. He warned that this trend is likely to escalate, putting Thailand at a disadvantage.

(2025/02/10-00:00)