Often referred to as Thailand’s second city, Chiang Mai is located a little far from Bangkok to play second fiddle as a commercial or residential hub.
Chiang Mai has actually weathered the recession much better than other Thailand property markets that attract significant amounts of foreign money, because it has a robust local sector and its potential for growth and property investments cannot be ignored.
Positive influences
Towards the end of 2011, two events had a significant impact on the Chiang Mai property market. The first was the return to power of a Shinawatra government, well known for favouring their hometown in development policy. The other was the disastrous flooding in Bangkok, which encouraged many to ‘look North’.
Without a beach to lie on, the jetset are far less likely to snap up holiday villas in the northern capital, but a burgeoning expat retiree population and pleasant living conditions have
Chiang Mai has actually weathered the recession much better than other Thailand property markets that attract significant amounts of foreign money, because it has a robust local sector and its potential for growth and property investments cannot be ignored.
Positive influences
Towards the end of 2011, two events had a significant impact on the Chiang Mai property market. The first was the return to power of a Shinawatra government, well known for favouring their hometown in development policy. The other was the disastrous flooding in Bangkok, which encouraged many to ‘look North’.
Without a beach to lie on, the jetset are far less likely to snap up holiday villas in the northern capital, but a burgeoning expat retiree population and pleasant living conditions have
Resort condominiums
nevertheless made it the darling for many Thai and foreign investors. A serious increase in the number of luxury condos and the arrival of some very upmarket villa developments in recent years, suggest a dynamic growth in the city’s property market. “Businessmen recognise that and now expect a surge in commerce, so the shop-houses have all suddenly start going up,” says Jim Holden, a local business-person with a finger on the pulse of local politics. “In fact, the pace of building took a notable upswing last September.”
Sure enough, by early 2012, cabinet had held its first mobile cabinet meeting in the city and approved a US$5 billion project to link Chiang Mai with Bangkok via a high-speed rail by 2016. They also pledged to improve the highway to Chiang Rai, introduce better flood prevention and add another phase to the airport’s ongoing upgrade. Meanwhile, an enormous convention centre envisaged by Thaksin before he was ousted, is in its final stages of construction. The Night Safari and Royal Flora, which carry his stamp of ambition, have been a boost to the city’s tourism attractions.
Not surprisingly, perhaps, all 16 of the province’s constituencies overwhelmingly voted for his party in the recent election.
Flow of investment
Flooding is a particularly sore point in Chiang Mai, which got an early taste of it last August when the Ping River burst its banks for the second time in five years. This adds particular risk to coveted riverside property, and businesses in the busy Night Market area suffered losses.
But there was a silver lining. According to Monthakan Intharasri, a local estate agent, when the floods hit Bangkok the phone didn’t stop ringing.
“Most people were looking for a short term rental, but they were also quite a few from Bangkok interested in buying a condo here for the future,” she said. “It’s definitely a buyers market, owners are property rich and cash poor right now, it’s become oversupplied.”
Intharasri’s company, In Focus Real Estate, deals equally with Thai and foreigner investors looking to lease and buy. Condos are the most popular option, she says, and rentals are the bulk of the interest since many people stay for the winter only.
Looking long term
Seasonal residents are certainly an important boost for the property market in the city, since the population swells during the cool months and condos are leased out to part time expats. But what if you want to settle?
The city has an agreeable pace, and the traffic isn’t yet a shade on the congestion of Bangkok, Phuket, or Pattaya, but the city boasts similar five star restaurants and decent shopping options.
“It’s a great place to live, but I’d say there really isn’t any top quality developers in Chiang Mai,” says Peter Coe, who has been buying and selling condos in Bangkok and Chiang Mai for several years. He’s prudently invested in several of Chiang Mai’s newer developments recently, but laments the lack of professionalism in the real estate sector. “They don’t provide all the covered parking they promised, and you need to watch how the juristic persons spend the common area funds. It depends on how organised the tenants association is, that’s important in this city.”
Coe also points out that land department and city planning rules are also quite loosely enforced in Chiang Mai, so there’s a risk of a condo going up next to your suburban house, or a noisy karaoke disturbing the neighbourhood peace. In this respect, the Nimminhemin area has become a nightmare for some residents, as the trendy, young student crowd pile into the increasing number of entertainment venues every night. Long-term residents say the area has already become a little like Bangkok’s Thong Lor district, where midnight traffic jams and late night noise are the norm.
Green Valley condominium
Appreciation of luxury
Despite the concerns, a new generation of luxury condos have become the most interesting sector of the local market for investors, with an almost guaranteed six per cent return. When the recession hit in 2008, there was a risk of oversupply but a steady influx of retirees has ensured that the foreign quota in most quality buildings is full. In recent years, locals in the know have done a good trade picking up ‘shells’ for a bargain, renovating them and flipping them for a healthy profit. But the banks have mostly offloaded them now, 12 years after the financial crisis. Their success depends on a critical mass of buyers and tenants to tip the building’s reputation into a positive position, and that largely also depends on the influence of a tenants committee to oversee correct common-area maintenance.
In Chiang Mai, houses and villas may be a far more satisfying option, and some newcomers actually invest in condos and then rent themselves a home out among the rice paddies. But it is still condos that provide the safe option to outsiders and foreigners. Buildings with names like Mountain Front, Touch Hill, Mountainview and Greenery Hills have all sold out since completion. A new generation, with names like Unique, Index, The Scene and Trams are targeting both Thai and foreigners with trendy, affordable units. Perhaps the most ambitious of developers is Quality Condo, a relatively new but successful player that has built and sold out several condominiums lately. They are setting the standard in satisfying foreigners’ expectations, and now have two further projects planned — Resort Condo and the luxurious Green Valley Golf Course Condominium.
Vasant Chawla, their managing director, is an expert on Chiang Mai’s property market. “There’s definitely been much more demand in the last six months, ” he said. “It’s related to the politics. Bangkok Thais are now looking North for a second home. Before it was Hua Hin. Demand for foreigners is a bit less now, the timing isn’t good with the currency situation, and also land prices have gone up 20 per cent lately.”
Despite this, Chawla’s newest development, overlooking the new International Convention Centre, is 50 per cent sold even though it’s only half built.
Aside from negative publicity from the burning of crops that lowers air quality every March, Chiang Mai must be getting something right. It is now home to some 25,000 foreigners. They form Expat clubs and enjoy regular Euro-centric events. Increasingly, they are being joined by Bangkok Thais spending weekends in the city. In recent years, chic arcades and coffee shops have sprung up alongside attractive new hotels, and at least one large lifestyle mall is under construction. As one local lamented recently: “The cultural charm is being replaced by sophistication”.
For some, however, that’s not a bad trend.
Investment Considerations
1. Locations outside the city proper offer rural surroundings within easy reach of amenities.
2. Management contracts and services provided by condominium operators can vary considerably.
3. Properties on the airport flight path suffer from serious noise pollution.
4. Properties next to the river may be prone to flooding.
5. Older condominiums represent excellent value, but a professional building survey is crucial.
6. Purchasing property from foreign owners requires thorough due diligence.
By Property Report
nevertheless made it the darling for many Thai and foreign investors. A serious increase in the number of luxury condos and the arrival of some very upmarket villa developments in recent years, suggest a dynamic growth in the city’s property market. “Businessmen recognise that and now expect a surge in commerce, so the shop-houses have all suddenly start going up,” says Jim Holden, a local business-person with a finger on the pulse of local politics. “In fact, the pace of building took a notable upswing last September.”
Sure enough, by early 2012, cabinet had held its first mobile cabinet meeting in the city and approved a US$5 billion project to link Chiang Mai with Bangkok via a high-speed rail by 2016. They also pledged to improve the highway to Chiang Rai, introduce better flood prevention and add another phase to the airport’s ongoing upgrade. Meanwhile, an enormous convention centre envisaged by Thaksin before he was ousted, is in its final stages of construction. The Night Safari and Royal Flora, which carry his stamp of ambition, have been a boost to the city’s tourism attractions.
Not surprisingly, perhaps, all 16 of the province’s constituencies overwhelmingly voted for his party in the recent election.
Flow of investment
Flooding is a particularly sore point in Chiang Mai, which got an early taste of it last August when the Ping River burst its banks for the second time in five years. This adds particular risk to coveted riverside property, and businesses in the busy Night Market area suffered losses.
But there was a silver lining. According to Monthakan Intharasri, a local estate agent, when the floods hit Bangkok the phone didn’t stop ringing.
“Most people were looking for a short term rental, but they were also quite a few from Bangkok interested in buying a condo here for the future,” she said. “It’s definitely a buyers market, owners are property rich and cash poor right now, it’s become oversupplied.”
Intharasri’s company, In Focus Real Estate, deals equally with Thai and foreigner investors looking to lease and buy. Condos are the most popular option, she says, and rentals are the bulk of the interest since many people stay for the winter only.
Looking long term
Seasonal residents are certainly an important boost for the property market in the city, since the population swells during the cool months and condos are leased out to part time expats. But what if you want to settle?
The city has an agreeable pace, and the traffic isn’t yet a shade on the congestion of Bangkok, Phuket, or Pattaya, but the city boasts similar five star restaurants and decent shopping options.
“It’s a great place to live, but I’d say there really isn’t any top quality developers in Chiang Mai,” says Peter Coe, who has been buying and selling condos in Bangkok and Chiang Mai for several years. He’s prudently invested in several of Chiang Mai’s newer developments recently, but laments the lack of professionalism in the real estate sector. “They don’t provide all the covered parking they promised, and you need to watch how the juristic persons spend the common area funds. It depends on how organised the tenants association is, that’s important in this city.”
Coe also points out that land department and city planning rules are also quite loosely enforced in Chiang Mai, so there’s a risk of a condo going up next to your suburban house, or a noisy karaoke disturbing the neighbourhood peace. In this respect, the Nimminhemin area has become a nightmare for some residents, as the trendy, young student crowd pile into the increasing number of entertainment venues every night. Long-term residents say the area has already become a little like Bangkok’s Thong Lor district, where midnight traffic jams and late night noise are the norm.
Green Valley condominium
Appreciation of luxury
Despite the concerns, a new generation of luxury condos have become the most interesting sector of the local market for investors, with an almost guaranteed six per cent return. When the recession hit in 2008, there was a risk of oversupply but a steady influx of retirees has ensured that the foreign quota in most quality buildings is full. In recent years, locals in the know have done a good trade picking up ‘shells’ for a bargain, renovating them and flipping them for a healthy profit. But the banks have mostly offloaded them now, 12 years after the financial crisis. Their success depends on a critical mass of buyers and tenants to tip the building’s reputation into a positive position, and that largely also depends on the influence of a tenants committee to oversee correct common-area maintenance.
In Chiang Mai, houses and villas may be a far more satisfying option, and some newcomers actually invest in condos and then rent themselves a home out among the rice paddies. But it is still condos that provide the safe option to outsiders and foreigners. Buildings with names like Mountain Front, Touch Hill, Mountainview and Greenery Hills have all sold out since completion. A new generation, with names like Unique, Index, The Scene and Trams are targeting both Thai and foreigners with trendy, affordable units. Perhaps the most ambitious of developers is Quality Condo, a relatively new but successful player that has built and sold out several condominiums lately. They are setting the standard in satisfying foreigners’ expectations, and now have two further projects planned — Resort Condo and the luxurious Green Valley Golf Course Condominium.
Vasant Chawla, their managing director, is an expert on Chiang Mai’s property market. “There’s definitely been much more demand in the last six months, ” he said. “It’s related to the politics. Bangkok Thais are now looking North for a second home. Before it was Hua Hin. Demand for foreigners is a bit less now, the timing isn’t good with the currency situation, and also land prices have gone up 20 per cent lately.”
Despite this, Chawla’s newest development, overlooking the new International Convention Centre, is 50 per cent sold even though it’s only half built.
Aside from negative publicity from the burning of crops that lowers air quality every March, Chiang Mai must be getting something right. It is now home to some 25,000 foreigners. They form Expat clubs and enjoy regular Euro-centric events. Increasingly, they are being joined by Bangkok Thais spending weekends in the city. In recent years, chic arcades and coffee shops have sprung up alongside attractive new hotels, and at least one large lifestyle mall is under construction. As one local lamented recently: “The cultural charm is being replaced by sophistication”.
For some, however, that’s not a bad trend.
Investment Considerations
1. Locations outside the city proper offer rural surroundings within easy reach of amenities.
2. Management contracts and services provided by condominium operators can vary considerably.
3. Properties on the airport flight path suffer from serious noise pollution.
4. Properties next to the river may be prone to flooding.
5. Older condominiums represent excellent value, but a professional building survey is crucial.
6. Purchasing property from foreign owners requires thorough due diligence.
By Property Report