The Swedish-Thai Property Gold Rush

Swedish property developers, Swedish real estate brokers and – in particu;lar – Swedish home buyers in the hundreds are spearheading an incredibly strong and growing Nordic property boom in Thailand.
Laws and regulations with grey zones, restrictions on foreign land ownership and foreign-owned companies, a natural disaster of huge magnitude which they were directly affected by, or even a coupe, have not been able to discourage the Swedes’ interest in Thailand as the number one favourite tourism destination and now also for long-stay and as winter quarters.
For the 2006/2007 high season more holiday trips from Sweden have been sold than ever before.

The next “Spain”
Think of any country outside Sweden that its citizens consider as a second home abroad and the long-term favourite Spain will probably come to mind – with its long history as the Northerners’ tourist Mecca. But, today, however, more likely Thailand is on everybody’s lips.
Thailand surely has a long way to go before reaching the high number of Scandinavian homes like in Spain. What is perhaps significantly different is Thailand’s enormous popularity – despite the much longer travel distance – and the speed with which the property market is developing.
The surge in buyers from Scandinavia acquiring retirement and holiday homes here are possibly outnumbering Spain by now as its allure wears off due to rising costs.
Thailand is selling well on its amazingly strong popularity through word-of-mouth and other factors like its low cost of living and year-round warm weather.
Developers are also capitalizing on Thailand’s growing popularity among aging baby boomers and to some extent can sell based on people’s feeling of urgency; that they need to buy soon in order not to miss getting their slice of paradise at bargain price.
“Many buyers want to be pioneers, for the first time in their lives being first, not the last ones like in Spain,” said Leif Egnehall of Thailandfastigheter in Prachuap Kirikhan.
Once some people have bought, others dare to follow suit.
Part of the explanation for the upsurge is also that a critical mass of people have visited the country several times by now, seen its advantages and are learning of all the new projects and that you can actually own a home in Thailand (even though some people are also both cautious and confused no matter how much they want a home here).
It has become the talk of the town and people in Sweden cannot avoid taking notice; being bombarded by advertisements in the media. The Swede’s (and other Scandinavians) have, to put it simply, embarked on a buying frenzy in Thailand.
One thing is for certain; that the price of attractive land will not stay cheap as Thailand is the preferred choice not only among Scandinavians, but attracting world-wide attention thanks to its resort destinations such as Pattaya/Jomtien and its resort island Phuket with world-class potential.

Time ripe for homes in Thailand
A strong contributor to what has turned into this boom is the property trade fairs arranged in Scandinavia by Fair Media International.
In Stockholm the fair has increased from 1500 visitors three years ago to nearly 8000 in September 2006, from which Mikael Bluhm of Phuket-based developer Scandinavian Laguna Resort reported that “Thailand rules”. Several other players were of the same opinion that attention regarding property in Thailand was stronger than ever before.
Out of 60 exhibitors, over 25 projects were selling Thailand.
“The attention is enormous, which of course is related to the fact that we Scandinavians live in a freezer,” said Björn Simonsson, Fair Media’s managing director.
Scandinavians increasingly aim to leave the harshness of the winter and relocate to emerging new markets like Thailand aside old Mediterranean favourites.
“It is also related to our passionate interest for other cultures, and being used to travelling. Other factors are that the economy is on top and the interest rate at record-low levels with people making lots of money as a result.”
“What Thailand contributes is making the dream of having a house at a reasonable price abroad possible and consequently having created a new target group,” continued Björn.
According to Fair Media, Thailand really took off after the 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.
Several developers noticed an increased interest – like on Phuket where they had feared facing a downward trend which never materialised.
“It was catastrophic. BUT – everybody in the world now knows where Phuket is on the world map. Now the positive outcome can be seen from this worldwide exposure,” said the Swedish developer Lars Ydmark from Tri-Asia.
Leif Egnehall thinks the tsunami contributed in putting to people’s attention that Thailand is a positive country and turned the attitude of those who were sceptical before.
“It starts with holidays and every other person travels to Thailand so it has become the norm. Automatically the next step is that people start looking for housing,” says Mikael Bluhm with a past in the hotel industry.
According to Stefan Widing, Executive Director at Logans Thailand, after four to five Thailand trips visitors start thinking: ‘Yes, it wouldn’t be such a bad idea to have a house here.’ And maybe they start by renting something first and then as a natural step buy something, looking at what is available.

Scandinavian developers
What is also significant with the Scandinavian property boom here is that it basically consists of developments controlled by Scandinavians, capitalizing on selling to their fellow countrymen. Swedes sell to Swedes etc. and such developments are mushrooming, with the Swedes taking the lead among the Northerners.
Stefan Widing thinks trust is of utmost importance; that the buyers find the management reliable, besides believing that Scandinavians prefer being able to live nearby other fellow citizens.
“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, Tri-Asia, seems to agree: “It’s about communication. We have European demands on living which Thais have difficulties in identifying. Foreign entrepreneurs understand this better.”
Lars also points out the importance of the Scandinavians relations to the Thais.
“I cannot pinpoint it but Thais and Swedes work well together. Something is really in clinch. Maybe it has to do with their humbleness that the Swedes respect. Swedes, in itself a respectful people – or Scandinavians – have lost very much of this familiar warmth that the Thais still have. So when Scandinavians meet this warm culture they feel at home.
Looking closer at some of the earliest Swedish developers they have a relation established to Thailand since long ago or a personal interest.
For Leif Thomas Olsen at Mangospa, a mixed-use housing estate and hotel outside Hua Hin, the project developed out of his wife Phuong Yung Mai Le’s and his own experience as house buyers in Hua Hin – desiring something different.
Leif and Yung had owned a house in one of the common congested estates where there were very few of the foreign owners around and with lack of maintenance and some gardens growing completely wild.
Their idea developed out of that experience into a concept where the social aspect is quite important and where the whole area will be looked after and a high degree of services offered to both residents and temporary guests.
“But the idea with a hotel is very much based on the need to deliver the services to the residents. And it is virtually impossible to make ends meet; to deliver services only to house owners. It doesn’t really work because you cannot be sure they will buy your services just because that it’s being offering them,” explained Leif.
Hence, they have become hoteliers as well.
For Logans Thailand who followed in the footsteps of Scandinavian Village, the decision was made to develop their own housing estates as they saw the strong interest in the country and the need for another variant of living from people who wished to own their house.
As its former managing director Stefan Widing was responsible for the operation and construction of Scandinavian Village’s first phase – the pioneering project launched in 2003, initially intended as a 55+ membership living for retirees with full onsite facilities. This was in fact the one which complemented the already huge interest in Thailand and paved the way for the expansion of the Scandinavian part of the local property market.
For Thailandfastigheter, with Leif Egnehall’s past experience from real estate in Spain and being married to a Thai lady the yearning was starting a development over here.
Both Logans and Thailandfastigheter in Prachuap Kirikhan acknowledge how they could benefit from the extensive marketing campaigns by Scandinavian Village and cater to early customers.
For Scandinavian Laguna it originates in a long period of following the tourism development and concluding that the time was ripe for housing in Thailand.

Thailand benefit from costly Spain
Mikael Bluhm is of the opinion that the allure of Spain is wearing off. It was in fact one of the reasons why he and his partners started a development project in the first place; seeing Thailand as the upcoming market, and having followed the development as active businessmen over many years.
Mikael sees the tendency that people are now raking in their yield by selling their properties in Spain.
“Spain has become too expensive. There are people having lived there for many years, now selling and taking parts of the profit to buy in Thailand instead.”
Leif Egnehall also expects reap benefits from that the cost of living in Spain has increased a great deal while Thailand offers significantly lower prices in comparison.
Whether or not Spain’s heydays are over they have only just started here.
Some of the critical mass of people who has seen the country’s advantages during a period of time are now converting into serious property buyers.
With starting prices which was initially as low as 1.5 million baht middle-range income earners who owns property back home can afford buying a house. Currently the price for a home at Scandinavian projects range from 3 – 7 million baht, where there is a wide selection of places, types and sizes.
Also the ‘Baby boomers’ are certainly an interesting target group.
“They normally have lots of money, good jobs, good pensions etc. and especially they have been travelling all their lives,” said Mikael.
It is also being noticed that not only retirees are buying but also people in their active working life, often business people investing for a future permanent home in Thailand. People seem to be purchasing early; anticipating that prices are going to increase rapidly here in the near future.
In another comparison with Spain, several players point out that the development cycle in Thailand seems to happening faster.
However Lars Ydmark doesn’t think we will see the same pattern in Thailand in terms of short-haul business.
“I don’t think the same thing will happen, you don’t have today any boom when it comes to Asian buyers. Westerners and Americans are the ones buying. So the long-haul people coming here make a smaller group and stronger consumer group.

Scandinavians introducing new concepts and areas
Another distinctive feature regarding is how the Scandinavian developments have been very much taking the lead here in introducing the full service concept with onsite amenities. This among foreigners appreciated living concept – where the home owners pay maintenance fee and easily can opt for renting out as the whole estate is well looked-after – follows the thinking behind aforementioned Mangospa.
With any estate made like a hotel; with a reception, a club house, a spa and gym etc., this stretches much further than what has been the norm with at best a common cleaned swimming pool.
Tri-Asia, who has acted as a motor in opening hotels in the region, sees a mixed-use development –a small hotel with 20 – 30 apartments which can function as hotel rooms – 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.”
Finally, apart from being strong in the Hua Hin area and on the Eastern Seaboard (from Bang Saen down to Jomtien) Scandinavians have also embarked on building on unspoilt beach-land, thereby paving the way for introducing new 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 will soon be no less than five Swedish developers, constructing villages near pristine beaches.
“Mae Pim is off the tourist track, and that is not only a disadvantage. On the contrary, it’s genuinely Thai. Then with the new airport it will take less than two hours to get there, so in that sense it is not off at all, with nice roads all the way,” said Stefan of Logans.
With this market in its infancy and the demand just being created, we are only seeing the beginning of the Scandinavian property boom in Thailand. “Definitely,” said Stefan Widing. “There are things you cannot take away from Thailand, no matter what happens: you have the climate and then Thai food, which can seem almost unbelievable how popular it is in Sweden.”
And those familiar with the Scandinavians’ strong interest in activities such as boating and golfing should have no difficulty in imagining Thailand’s attraction also on these points.