Indonesian favorite Asia – Newspaper Kommersant No. 59 (7504) dated 04/06/2023

The desire to invest in assets abroad and the decline in Turkey’s popularity have led to a sharp increase in Russian demand for property purchases in Thailand and Indonesia. During the year, their activity in these countries increased by one and a half to two times. With the resumption of tourism from China after the pandemic, the return on investment in the markets of Thailand and Indonesia may be higher than in Europe, but investments will be risky, analysts warn.

According to Tranio data, which Kommersant has, the demand of Russians for the purchase of real estate in Thailand in the first quarter of 2023 increased by 57% year-on-year, in Indonesia – by 39%. Vietnam showed a slight increase of 5%, while housing demand in the Philippines remained at the same level as last year. According to Prian.ru, in January-March, interest in buying real estate in Thailand increased 3.4 times year-on-year, in Indonesia – 2.2 times. These two directions now form 95% of the demand for properties in Southeast Asia, says Philip Berezin, editor-in-chief of Prian.ru. Requests for Malaysia, Vietnam and Hong Kong, the expert calls single.

Barnes International Moscow notes a 30% year-over-year growth in demand for Thailand and Indonesia, now they form 20% of the total demand for overseas property. Intermark Real Estate partner Irina Mosheva estimates the share of Asian markets at 20-30%.

Russians are one of the key foreign buyers of apartments in Thailand.

According to the Thai Government Housing Bank, in 2022 they formed 7% of deals, coming in second. On the first, by a wide margin, immigrants from China – 49.4%, on the third, US citizens – 4.7%. Mr. Berezin links the current recovery in Asian markets to the lifting of pandemic restrictions, the outbreak of hostilities in Ukraine, and the desire of Russians to invest abroad while reducing the number of available destinations.

Those who planned to buy property in Turkey have now reoriented themselves to the Asian market, says Elena Milishenkova, commercial director of Tranio. “Complication of the procedure for obtaining a residence permit, the rise in prices in the resorts of Antalya and the fears associated with the earthquake forced investors to expand the search field,” she argues.

According to Ms. Milishenkova, buyers consider the possibility of paying for the transaction directly from Russian accounts, the absence of seasonal fluctuations in rental demand and a relatively low investment threshold as an advantage in Southeast Asia, according to Ms. Milishenkova. In Thailand, it starts from $100 thousand (8 million rubles), in Bali – from $150 thousand (11.9 million rubles). The average budget of transactions of Russians in the first quarter amounted to $166,000 (13.2 million rubles) and $200,000 (15.9 million rubles), respectively, according to Tranio. Over the year, average prices in Thailand rose by 5%, in Indonesia – by 26.6%.

Philip Berezin believes that many Russians consider real estate in Asia as an investment: “With the revival of tourism and the opening of China’s borders, the demand for both buying and renting will increase.”

Denis Perkovsky, head of the foreign real estate department at Barnes International Moscow, calls investors at least 70% of buyers of Asian real estate. According to Prian.ru, rental income in these countries can reach 7-9% per annum, due to the rise in construction costs, it will be possible to earn up to 40-50%.

However, Asian real estate markets are not as stable as European ones, Philip Berezin warns: “There may be delays in construction, its poor quality, and fluctuations in tourist demand.” In addition, each country in Southeast Asia has its own taxation nuances, adds Ms. Mosheva.

But prices for secondary housing with all the infrastructure, especially on the islands of Indonesia and Thailand, due to the lack of land for building in the future may rise, says Denis Perkovsky. Irina Mosheva names the general movement of world capital towards Asia and the active development of the subregion as an important factor. The growth of the local solvent population, in her opinion, has a positive effect on the real estate market.

Alexandra Mertsalova