Move over Spain as more Scandinavians invest in Thailand Property

by Joakim Persson

Despite recent disturbances such as the coup and confusion over land ownership issues and visa regulations, Scandinavians are sidetracking traditional retirement destinations such as Spain and looking with greater interest at buying into the Thai lifestyle.

"Thailand rules," exclaimed Mikael Bluhm of Phuket-based developer Scandinavian Laguna Resort. Speaking from the last month’s ’Purchase House Abroad real estate fair in Stockholm, Bluhm confirmed that the attention from Scandinavians regarding property in is stronger than ever before.

Property trade fairs, arranged in Scandinavia by Fair Media International, have been playing an important role throughout Nordic countries in boosting interest in purchasing a second home abroad during the past three years.

Exhibiting in five Scandinavian cities, the fair has increased from 1,500 visitors at the Stockholm fair three years ago to this autumn’s forecasted 8,000, with more than 60 exhibitors. At the last fair, some 25 projects were selling from Thailand.

"The attention (to Thailand) is enormous, which of course is related to the fact that we Scandinavians live in a freezer," says Bjorn Simonsson, managing director at Fair Media. "It is also related to our passionate interest for other cultures, and being used to travelling. Other factors include that the economy (in Scandinavia) is on top and interest rates are at record-low levels with people making lots of money as a result."

Another factor is the emergence of new markets that are sidelining traditional Mediterranean countries that offer significantly lower prices and the year-round warm climate Scandinavians are yearning for.

"What contributes is the possibility of the dream of having a villa abroad at a reasonable price," continued Simonsson. "And the long distance from Europe is no longer considered as an obstacle."

According to Fair Media, Thailand really took off after the 2004 tsunami, mainly to do with the enormous exposure this had in Sweden, and as it turned out, also leading to stronger ties between the two countries.

Indeed, with no exaggeration, Scandinavian developments have been mushrooming on the Thai market. Houses and apartments have already been snapped up by Scandinavians in the hundreds. And what is significant with the Scandinavian property boom here is that it basically consists of developments controlled by Finns, Danes, Norwegians and Swedes selling to their fellow countrymen.

"Our strength is being Scandinavians selling to Scandinavians," said Jan Skölderud who hosts prospective buyers visiting Logans Thailand, a developer with projects in Bang Saen and Mae Pim (Rayong). "We have a Swedish construction engineer and five Swedes working on location at the construction site."

Logans’ Executive Director, Stefan Widing, thinks trust is of utmost importance.

"Most of all, I think it has to do with communication," he said. "You understand each other and what you want. It’s more easy to see the needs if you are Swedish yourself. You adapt things to how you want them to be and then it’s usually quite similar to what other Swedes also want."

Lars Ydmark, a Swedish developer from Tri-Asia on Phuket says: "It is about communication. We have European demands on living which Thais have difficulties in identifying. Foreign entrepreneurs understand better."

Having sold over 250 houses and apartments since June 2004, Logans took the decision to develop their own housing estates once, and thanks to, the task to constructing a project called ’Scandinavian Village’ was finalised.

This pioneering project, launched by a Swedish investor back in 2003 and initially intended as a 55+ membership estate for retirees with full onsite facilities, was in fact the one which paved the way for the Scandinavian property market’s fast expansion in Thailand.

"I had seen the need for another variant of living other than the 55+ age group," said Widing. "People from other age groups wished to own their houses. This complimented the already huge interest in Thailand and was the reason for our start."

"Scandinavian Village rolled out the carpet for us and created an interest for living in Thailand. But people’s reactions were negative about their costly membership," said Leif Egnehall, Managing Director at Thailandfastigheter in Prachuap Kirikhan.

Both Logans and Thailandfastigheter are developers that have benefit from the extensive marketing campaigns by Scandinavian Village.

"Thanks to them, we have succeeded. Many, who first went to Scandinavian Village, have bought from us. At that time we were the only alternative," explained Egnehall who as of September 2006 had sold 250 units in Thailand, mostly houses.

For one of Logans’ early customers, Eva Shimds, said the decision was about not missing getting her slice of paradise at a bargain price.

"We felt that if we should jump on this we should do it now," she explained. "When we bought in Spain, we hesitated for a year and would have earned a lot more had we bought at once. So now we feel we should join in from the start."

"Many buyers want to be pioneers for the first time in their lives, not the last ones like in Spain," said Thailandfastigheter’s Egnehall.

Whether or not Spain’s balmy days are over are yet to be seen, but developers in Thailand point out the escalating costs of living there as an advantage for the Thai market. Developers also render how property owners in are selling with a profit and buying here instead.

"Within one or two years I believe Thailand will take over from Spain," said Egnehall, who used to be a real estate broker there. "All general expenses in are now quite high, so they have failed price wise. You cannot cope with having the same prices as seen in Sweden. Prices on houses can always go up, but there is not one single multi-millionaire from who wants to throw away his money."

Bluhm at Scandinavian Lagoon Resort is of the same opinion that the allure of Spain is wearing off as it has become too expensive. It was in fact one of the reasons why they started a development project in the first place, seeing Thailand as the upcoming market, and having followed the country’s development as active businessmen over many years.

"It starts with holidays, and that has become very established these days," said Bluhm. "Every other person travels to Thailand, it has become the norm. Automatically the next step is that people start looking for housing."

Some of this critical mass of people who has seen the country’s advantages are now converting into serious property buyers, bombarded by the media with the growing new opportunities to buy here.

With starting prices initially as low as Bt1.5 million, middle-range income earners who own property back home can afford buying a house here. Currently, the price for a home with most Scandinavian developers range from Bt3 – 7 million, where there is a wide selection of styles and sizes.

"The baby boomers are certainly an interesting target group. They normally have lots of money, good jobs and good pensions. And especially, they have been travelling all their lives," said Bluhm.

He went on to say that people over 60 years of age are a smaller group here than in the Mediterranean as they are less daring to buy in an unfamiliar country.

Another distinctive feature regarding the Scandinavian developments in Thailand is their emphasis on providing full service and onsite amenities, where the home owners pay a monthly maintenance fee.

Tri-Asia, who has acted as a key motor in opening hotels in the region, sees mixed-use developments – a small hotel with 20–30 apartments functioning as both a hotel and private residence - as the optimal business model.

"Owners will have access to the hotel business and we, having the management of a hotel as the nucleus, can spin on with the apartments around it," said Lars Ydmark, MD of Tri-Asia.

Ydmark, who has no intention of becoming purely a Scandinavian developer, is about to launch an apartment project which will be Scandinavian-targeted.

"We are then looking at smaller apartments nearer to the beach which is what the broader Scandinavian masses are looking for," he announced.

Apart from being strong in the Hua Hin area and on the Eastern Seaboard (from Bang Saen down to Jomtien), Scandinavian developers have also embarked on building on unspoilt beachheads, and thereby paving the way for the introduction of unexploited areas to the market.

Huay Yang, south of Prachuap Kirikhan, where Thailandfastigheter settled down is one such place. Mae Pim beyond Rayong is another where there are already three Scandinavian developers, constructing villages near pristine beaches.

"Mae Pim is off the tourist track, and that is not a disadvantage. On the contrary, it´s genuinely Thai, the price level is in synch, there are no swindlers about and there are none of the bad aspects of Thailand, only positive ones," said Widing of Logans Thailand. "Then, with new airport it will take less than two hours to get there, so in that sense it is not off the track at all, with nice roads all the way."

Finally, many players in the local market seem to agree on another notable difference from Spain: that actual development is progressing faster in Thailand.

"We thought it would take time for the Thai market to ripen among Swedes and Scandinavians so we had anticipated perhaps five to ten years for the boom to come. But it has grown faster," said Thailandfastigheter´s Egnehall.

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