The forecourt of the high-end property 98 Wireless is pictured in downtown Bangkok. (PR photo)

In chic central Bangkok, a foreign buying binge is fuelling a red-hot market for ultra-luxury real estate.

At 98 Wireless, a luxury condo opened last March in the capital, one buyer from Hong Kong snapped up a 70 million baht apartment without more than a moment’s thought. “It was an impulse purchase for him,” says Uthai Uthaisangsuk, an executive at the project’s developer, Sansiri Plc. For the price of a cramped studio back home, the investor had bought an opulent two bedroom spread with Ralph Lauren furniture, three bathrooms outfitted with Carrera marble, butler service and a chauffeured Bentley limousine.

Scenes like this have become more common in the capital, where foreign money is pushing up prices at the top of the real estate market, even as developers struggle to sell more pedestrian properties. With the economy still recovering from a 2014 slowdown, household debt makes it tough for the average Thai person to qualify for a home loan, so companies like Sansiri and Country Group Development Plc are selling luxury to foreigners.

“Developers are having problems selling to locals,” said Ratchaphum Jongpakdee, general manager for Thailand at real estate firm Colliers International Group Inc. “But they have no problem selling to foreigners.”

Buyers definitely get more bang for their buck in Bangkok than in Hong Kong (comparing things like living space and bathroom fixtures). But what’s surprising is that, even though condominium prices in the centre of the Thai capital have doubled in the last five years, they’re still cheaper than in less-travelled cities like Jakarta, Kuala Lumpur, or Vietnam’s Ho Chi Minh City, according to real estate advisors.

The price-gap could be set to close, though. Once a niche tourism destination for backpackers, Bangkok in 2016 surpassed London to become the world’s most visited city, hosting 19 million overnight travellers, about two for every resident. The boom has put the city on the map for investors, especially mainland Chinese who are coming in droves.

Bangkok's tourism boom has put the city on the map for luxury property investors. Real-estate prices have doubled in the past 5 years, but high-end homes are still a bargain in comparison to parts of Hong Kong or New York https://t.co/MgIpI4QkC9 pic.twitter.com/QrOVav01NG

— Bloomberg Economics (@economics) May 2, 2018

Last year, land prices in the city centre jumped a record 30%, with foreign investors making up almost a quarter of the capital’s high-end property sales, according to commercial real estate firm CBRE Group. In the last quarter of 2017, the price of luxury condos rose more than 10%, outpacing every other market segment, data from Bangkok’s Real Estate Information Centre shows.

Fuel for the fire has come, ironically, because of China’s attempts to stop the outflow of money from its borders. Caps imposed last year on how much capital people can take out of the country have had the unintended effect of funnelling cash into property markets like Thailand’s, where prices are relatively cheap.

A scarcity of buildable land in the city centre is a limitation on developers. For investors, though, it’s a big reason high-end apartments should continue to appreciate, according to Patti Tomaitrichitr, an analyst at Macquarie Securities Thailand Ltd in Bangkok.

“It’s not easy to find a good plot in a good location right now, so prices will keep going up,” she said.

98 Wireless (PR photo)

Sansiri, the developer behind 98 Wireless, the 25-storey apartment tower named for its coveted address, began advertising luxury condos to foreign buyers in 2014, when the local economy was in the doldrums. The company now holds marketing events in Hong Kong almost every month and last year opened three more offices in mainland China, in addition to the one it had in Beijing.

Chinese buyers helped Sansiri sell half of the 77 apartments at Wireless before construction was finished, according to Uthai, the developer’s chief operating officer.

At another luxury condo nearby, the Magnolias Ratchadamri Boulevard, some 80% of the units have already sold, with investors from Hong Kong, Singapore and Taiwan accounting for more than half, according to the developer, Magnolia Quality Development Corp. The 60-story spire features a five-star Waldorf Astoria hotel on the lower floors.

The numbers are similar at the Four Seasons Private Residences, which is currently under construction on the edge of the Chao Phraya River. Some 70% of the 355 units have already been purchased, with half of the buyers coming from outside Thailand, according to Ben Taechaubol, chief executive officer at the developer, Country Group.

Thailand has fewer limits on foreign condo ownership than some places in Southeast Asia. Even though non-citizens are allowed to own no more than 49% of the units in any single project, they can buy condos built on freehold land, where ownership doesn’t have a time limit tied to a lease on the underlying dirt. That’s not allowed in neighbouring Vietnam or Laos.

Another benefit: foreign buyers aren’t hit with special taxes, as they are in Singapore and Hong Kong.

The January sale of Britain’s Bangkok embassy, on a coveted freehold land downtown, was Thailand’s most expensive real estate deal ever. The buyers, a partnership between local and Hong Kong developers, paid about 19 million baht for a parcel the size of six football fields. The plan is to knock down the existing colonial-era buildings and put up an office tower with luxury condos or a hotel on top, according to Central Group, one of the new owners.

“Every day, developers are literally knocking on the doors of embassies, businesses and homeowners, anyone with land in the central downtown,” said Ratchaphum, the Colliers executive. “It’s almost impossible to find freehold land in these areas.”