Chiang Mai likely to remain a favoured residential and tourism destination after coronavirus scare recedes
As we all know, the impact of the novel coronavirus COVID-19 is affecting our daily lives in unprecedented ways.
Accordingly, it may still be a little too early to ascertain the full impact of the virus on the Chiang Mai real estate market, when compared with other health related events such as SARS or H1N1, or even the GFC financial meltdown in 2008.
Yet, one thing is clear: history repeatedly shows that financial and property markets do recover from such events. It’s just a question of time.
We’ve been through major financial and health related crises before and the real estate market always shows resilience.
This is particularly so for Chiang Mai, which remains a favoured destination for out of province Thai buyers and foreign (both intra-Asia and ex-Asia) renters and buyers. Some of these are full or part time retirees, and some business people.
Why do we say this? Well, partly from our past experience, and partly from what we were seeing in the real estate market in the early days of the pandemic.
Past experience shows:
- Turbulent financial markets cause a flight of capital to real estate: in difficult times, traditionally, investors seek safe havens for their assets and cash. It’s preferable to own “bricks and mortar” rather than stocks and shares whose values may fluctuate wildly;
- Mortgage borrowing rates are lower than ever:The Bank of Thailand recently held its policy rate at 0.75%, with mortgage rates around 3.5%.
- Such moves are aimed at keeping financial markets stable and making borrowing costs as low as possible to stimulate domestic spending (and thereby the economy)—affording Thai home buyers, who make up the vast majority of the Chiang Mai market, an excellent opportunity to buy a new home or upgrade.
- Foreign demand will return and may likely increase: many non-Asian foreigners intend to return to Chiang Mai once they are able, both to escape the relative chaos in Europe and, of course, the impending winter months. Then there are the Asian based foreigners, plus people from Hong Kong, Singapore and Malaysia, in due course, who were active in the market previously, and who will return.
- Then, we also have the Chinese renters and buyers who, pre-pandemic, made up the greatest proportion of foreign demand. As the number of new coronavirus cases in China has been falling and the outbreak is almost under control, as soon as people from the Mainland can travel internationally again, this should help enhance demand for Chiang Mai real estate.
Let’s summarise our expectations
These comments are based on market responses to pandemics and other crises over the recent past, and takes into account the underlying multi-national demand for real estate in Chiang Mai.
Looking beyond the short-term, there are a variety of other factors which offer support to real estate fundamentals in the city and may lead to an improved outlook for the condo and budget housing sector (ie under Baht 5 Million) towards the 3rd and 4th Q of the year.
With most of us staying in to help with the situation, please spend some time to post your thoughts and comments below. As we love to hear from you.