If you’re looking for a real estate market that’s set to soar, cast your eyes east to Thailand. Its northern city Chiang Mai is set to become a major regional commercial, educational and technology hub.
Chiang Mai’s historic importance developed thanks to its location on the Ping River and on other major trading routes. These trading routes went quiet as wars and other disputes beset the region. But peace has settled here and that quiet is set to change.
Trans-border infrastructure (Chiang Mai is close to the Burmese border) has rolled out. Universities are preparing to welcome an influx of foreign students. Major hospitals and research centres are being built. Shopping malls are opening their doors. It’s all happening in the ancient city of Chiang Mai.
By the end of this year, the 10-country group of ASEAN (Association of Southeast Asian Nations) plans to become a “fully integrated regional economy” with the creation of AEC (the Asian Economic Community). Trade barriers will disappear. People and businesses will be able to move more freely. New strategic commercial, manufacturing and logistics hubs will emerge.
The vision is a “southern Silk Road” connecting China’s Yunnan province to Malaysia and beyond. Beijing’s plans call for a fivefold increase of its foreign direct investment in the ASEAN group of countries to $208.14 billion by 2020, from $41.6 billion last year. That trade will hit $1.38 trillion by 2020.
The stand out beneficiary of all of that growth, investment and innovation will be Chiang Mai.
The Chinese are coming in a major way. Middle-class families are flooding in to set up homes and businesses. They’re coming for more than money-making potential: Chiang Mai offers a respite from the congested cities of China and insanely high real estate values.
This is a welcoming place, with a rich history and culture, great weather and a low cost of living. Western expats have been coming for decades. Estimates put their current population at 40,000. They come from Australia, Europe and the U.S.
Japanese and South Korean retirees are also here, and more are coming. Japanese corporations and manufacturers have had a major presence in Thailand for decades. Many Japanese have worked in Thailand. Demographic changes are pushing more in this direction. They are coming for the same thing as the Chinese expats—to escape the winters to the northeast, enjoy space and clean air, and stretch their retirement yen.
Among Chiang Mai’s student population, of 100,000 across 10 universities, there’s a large population of foreign students. More will come, especially from China. How it plays out is that the first generation toils hard to get ahead. Their hard-earned cash gives the next generation every advantage in this country, including an elite education. It’s so good that some Chinese people are even moving to Chiang Mai for high school education.
University towns like this become hubs for innovation and high-skilled jobs, and, with the removal of barriers between AEC countries, it will be easier for students to come and stay.
Global corporations are looking for footholds with the new economic community—not just to manufacture and ship, but to cater to fast-growing new consumer demands.
As with any other locale, I’m looking for opportunities where there is fast capital appreciation with a strong rental yield. Right now, there’s already a shortage of high-end rentals in areas close to prestigious hospitals, business parks and private universities. The market I want to target for rental and resale is the mobile “internationalised” market. This includes visiting executives (from Bangkok and elsewhere), folks coming for medical treatments, and wealthy students.
The best way to play this market is to buy a luxury condo preconstruction. You can buy with a few thousand dollars down and manageable monthly payments. I expect capital appreciation during construction and double-digit rental yields when you take possession of your condo.
Your sights should be firmly set on the opportunities in Chiang Mai…mine are and I’ll be going there soon to explore them further…
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