Bangkok’s condo market still proves to be a smart investment.
By Romesh Navaratnarajah
Bangkok has faced some tough challenges in the last few years, namely, political uncertainty and most recently, the bomb blast, but it always seems to bounce back from hard times.
Thailand’s capital still draws many Singaporeans looking for lucrative investment opportunities in its growing condominium market, due to a combination of rising property values, strong rental demand, and proximity to Singapore, which is only a two-hour flight away.
At the same time, the economy is slowly recovering from 2014, with GDP growth at 3.0 percent in the first three months of 2015, up from 2.1 percent in Q4 last year.
One area that is being widely watched is downtown Bangkok. The condo market there continued to expand in the second quarter this year, driven by the success of off-plan sales in newly launched projects, said a DTZ report.
There were eight developments launched in the quarter offering a total of 4,106 units. “This is a strong increase of 37 percent quarter-on- quarter from 2,991 units in Q1 2015, indicating robust demand for such properties, added the consultancy.
More homes, higher prices
More people are buying up homes, pushing prices higher.
“The average selling price of condominiums in the city area in Q2 2015 was THB 212,588 (approx. S$8,330) per square metre, a 7.1 percent increase quarter-on-quarter and 18.5 percent increase year-on- year,” said Risinee Sarikaputra, research head at Knight Frank Thailand.
Meanwhile, Khalil Adis, founder of Khalil Adis Consultancy, advises interested buyers to go for condominiums near BTS or MRT stations, as they are easier to rent out.
“If you are buying for investment, it is best to get two- or three-bedroom units. Most expatriates who work in Bangkok need a bigger space for the entire family,” he shared.
He added that popular districts among the expatriate rental market include Sukhumvit, between Sois 1 to 63 and 2 to 42, as well as Sathorn Road and Central Lumpini.
Buyers take note!
There are strict rules for foreigners buying property in Thailand. They cannot own landed property, but can own an apartment or condominium as long as 51 percent of the building is owned by Thai nationals, said Adis.
But he pointed out that foreign buyers can own landed property via a 30-year lease or through a limited company specifically created for that.
Those looking to finance their property purchase offshore can apply for a bank loan, but only from selected banks. For instance, Bangkok Bank and United Overseas Bank in Singapore will finance certain developments, he noted.
As it is difficult for foreigners to get financing, most expatriates prefer to rent, which increases the demand for rental units in the city. Expected yields in Bangkok are in the four to five percent range.
CITY FAST FACTS
• Population: Estimated 8.5 million
• Total area: 1,569 sq km
• Currency: Thai Baht (THB)
• GDP per capita: US$5,575 (2014)
• GDP growth: 0.7 percent (2014)
• Future transport: Expansion of the BTS and MRT subway system by 2029
• Home prices: Up 23.9 percent year-on-year
• Distance from Singapore: 1,418 km