Stephen Yao travelled from southern China’s Guangdong province to Thailand 32 times in 2017 and 2018 to help middle-class Chinese families invest in condominiums in Bangkok and Pattaya.
Two years ago he was still shuttling frequently between the two countries, seeking buyers to take over those properties.
But his wings have been clipped more recently as the boom in Chinese middle-class investment overseas has faded, with household wealth shrinking amid a sluggish economic recovery and a prolonged domestic real estate slump.
“Most of the property agents have switched to other careers,” Yao said. “How many middle-class investors are still earning what they were earning back then? They’re struggling with unemployment and domestic mortgage payments, while their overseas investments offer no relief.”
In the late 2010s, when the economy was growing rapidly, overseas real estate investment by middle-class Chinese surged, with the condominium markets in Thailand, Vietnam, Malaysia and Japan attracting large numbers of Chinese buyers eager to diversify their investments and experience new lifestyles.
Nowadays, Yao said, some of those who were unable to continue paying their mortgages had managed to recover about half their investment through legal channels. Others resorted to domestic consumer and business loans, but those who chose to hold on to their Thai properties were facing “sunk costs” on assets that were not easy to liquidate.
“The market for foreigners’ second homes in Thailand is limited,” Yao said. “Besides, the bed and breakfast (B&B) market for Chinese tourists, the main source of income for such Chinese middle-class investors, has shrunk significantly due to the decline in the number of Chinese tourists and rising operating costs.”
Zhu Maowen, a freelance writer from Haikou, Hainan province, who bought properties in Bangkok, said the value of second-hand properties in Thailand had not appreciated significantly.
“While rental returns can be about 5% or higher, the expenses of maintaining a property are much higher than originally expected,” Zhu said.
As the property market has foundered, Yao is now attempting to pivot into the service sector, hoping to help Chinese building material brands find new markets in Thailand.
Buyers who invested in property in Tokyo are faring slightly better.
“Although short-term B&Bs are banned in Japan, the long-term rental market is relatively stable,” said Tina Chen, a property consultant who specialises in the Japanese market. “But the depreciation of the yen has eroded the returns when converted back into yuan.”
Emma Jian was one of the many middle-class Chinese investors who flocked to Malaysia to buy property in 2017.
“The project is still running, and units are still being sold,” she said. “Although prices are still lower than when I bought mine [for around 20,000 yuan (93,500 baht) per square metre, they have improved from the lows of the past two years.
“I’ve given up on selling the condo because it’s hard to get non-Chinese buyers, and it’s not easy to rent it out. Now I use it as a holiday home, and no longer expect it to appreciate.”
Even in Vietnam, the Southeast Asian property market seen as having the best prospects for appreciation, it is much harder than it was a few years ago to convince Chinese investors to view properties and consider purchases, property salesman Frankie Wang said.
“We’ve been selling off-plan homes in Ho Chi Minh City’s city centre and near the new airport with a minimum down payment of 300,000 yuan,” he said. “Over the past two years, prices have risen by more than 20% annually, calculated in Vietnamese currency.
“We promoted it to upper-middle-class investors in Guangdong late last year, but the response was lukewarm. Middle-class Chinese families no longer have the boldness or capital to invest overseas as they once did.”
