Neil McDonough

Possible effects of ASEAN

It can only be good news for the Bangkok property market


It's that time of the year again for almost everyone across the globe - both a time for reflection and a time to assess our plans for the future. Not Xmas, but New Year. New Year for any brings about hopes of a new start, new projects and possible new plans taking shape. In 2015 this will be especially true for the countries of ASEAN with advent of the AEC.

If all things go to plan (and that of course is no guarantee) then in 2015 the countries of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam) will open their respective borders to one another (economically at first) and for the AEC (ASEAN Economic Community) there will be a free movement of goods and services, labour and capital. In theory then, a citizen of any of the 10 countries will become a citizen of all.

A few quick figures display the AEC as a potentially formidable economic region, with over 600 million people and a combined GDP making it the 8th richest market in the world. So what can this mean for Bangkok and it's real estate market? Well of course no one can predict the future exactly, but looking at 3 possible areas that may get influenced by the integration.

Economic expansion of Bangkok

For all its faults (and like any big city, Bangkok has many), Bangkok is geographically in probably the best position to take advantage of the AEC. With links by airplane to almost all of the other nine capitals in 3 hours or a lot less, Bangkok is practically a central hub. And this has been reflected in its main airport at Suvanarbhumi. When opened in 2006, Suvarnabhumi was built for a capacity of 45 million passengers a year, and despite the huge global recession of 2008 till present, it has indeed surpassed that number already.

In fact there are already advanced talks into how the airport will be expanded with a second terminal to handle 100 million passengers per year. And due to the increased demand, the old Don Muang airpost has been reopened and is likely to continue to expand its services as well. This means that it is already easy for a high number of AEC citizens to come to Bangkok to visit or to work.

Presuming the AEC works in a similar fashion to the old EEC (now EU) then it will make it easier for AEC citizens to not only move to Bangkok, but also to set up businesses and help expand the economy in Bangkok. This will then in turn lead to an increased demand for property in Bangkok, whether for rent or to buy. In theory large numbers of people could come to live in Bangkok from countries like Indonesia, Vietnam or Cambodia to work for companies owned and run by their compatriots.

The expansion in the buy-to-let market

I'm sure it has escaped no expat's notice that many of the new condos that have been built within walking distance or easy travel of a BTS or MRT station have been geared to the buy-to-let rental market. Many expats live in these clean, modern and convenient properties, and many are ideal for bachelors, bachelorettes or even couples and small families to live in.

Once again, presuming that non-Thai AEC citizens take advantage of Bangkok's infrastructure (at present superior to many of the other AEC capitols) and its geographical location, then it is not much of a stretch to see how some sensible non-Thai investors will look to the Bangkok buy-to-let market for decent returns.

If for example a wealthy Cambodian reads that many Cambodian businesses are setting up in Bangkok and employing fellow Cambodians (and other expats) then he/she may see Bangkok's real estate market as a good investment opportunity, especially with the free flow of capital the AEC offers.

Holiday homes in Bangkok

It used to be the case that when westerners talked about shopping in The Far East the main two destinations mentioned were Hong Kong and Singapore, but in the last 10-15 years that has changed. The huge expansion in modern super luxurious shopping malls in Bangkok has led to a huge amount of regular weekend air traffic coming into Bangkok to shop. Not just from the likes of India, China, Indonesia and other SE Asian nations, but also ironically from Hong Kong and Singapore.

This has led to a rise in newly wealthy Chinese and other Asians to buy properties in Bangkok for convenience of travelling to Bangkok to shop and to stay for a few days.

With the opening of the AEC this trend looks set to not only continue, but also increase. With the free flow of capital across 10 markets then investors will feel even more confident to buy a luxury like a holiday home in Bangkok.


Neil McDonough is a Director of EasyHomes Property Services Co., Ltd. which specializes in renting and selling Bangkok residential and commercial property to expats. You can contact him directly with any questions or queries relating to Thai real estate




Comments

What amazes and infuriates me about Neil's article is that he hasn't once mentioned the effects ASEAN will have on the English teaching industry. This was a perfect opportunity to home in on this subject and highlight whether or not he thinks it will be boom time for people in the ESL industry. What a complete waste of an article!!

By Paul Nelson, Thailand (23rd December 2013)

I disagree with Mr. James
If there's one thing that Thailand is adept at, it's moving on from bad situations and recovering really quickly. The current state of affairs will soon become yesterday's news just like all the other grim headlines that have had little long term impact on the country. It's not just Mr. Neil or the Thais that see what's good about the capital, and the country; the positives of this nation are shared by thousands of expats and independent organizations the world over.

For example Mr. James, did you know that Bangkok has been voted as "The World's Best City Award" for four consecutive years (2010-2013) by Travel and Leisure Magazine? And this month, December, Thailand was voted 'Best Country in the World 2013' during the annual WCA ceremony in Bkk? Furthermore, in October, 2013, Thailand tops the list for best quality of life for expats in the annual Expat Explorer survey. And all these internationally recognised achievements are happening during your five year period of downward spiral - go figure!

Doesn't sound much like a country or a capital in turmoil from where I'm sitting!

Sean, Bangkok

By Sean Greenhall, Bangkok (15th December 2013)

I read with increasing wonderment about the glowing reports of Bangkok, despite its floods, political corruption and social unrest. Imagine my amazement then when I got to the very end and find it's written by . . . an estate agent whose business it is to rent out homes to expats :)

Mr McDonough, Thailand has been on its last legs for five years and is continuing on its downward spiral.

By James, China (10th December 2013)

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