Bangkok Real Estate is booming, offering investors a unique opportunity to profit through a combination of rising resale prices and steady rental income!
Before diving head first into a property search, it is always advised to do some careful due diligence to understand local trends and market conditions.
Here are 10 Investment Tips that are unique to Bangkok’s Property Market:
1. The BTS/MRT Factor
According to the World Bank, Bangkok City accounts for nearly 80% of the Thailand’s total urban area. The economic significance of the City, inevitably results in massive traffic jams that are a challenge to the city’s commuting working professionals.
Therefore proximity to Bangkok’s Mass Transit System (BTS/MRT), is a crucial factor that affects the popularity of a condominium project. When buying a condo always aim to select buildings, within close proximity to BTS/MRT stations especially if the primary goal is to acquire a buy-to-let investment!
2. Developers Affect Value
Just like handbags, shoes or cars in Bangkok the value of condos are affected by the brand of the Developer!
This is because established developers often have greater experience and spend significantly more resources on planning design, layout and functionality of their projects. This thus results in better quality and more attractive condos. Secondly, Projects from well-known developers tend to benefit from more prestige and better exposure!
3. Building Management Makes or Breaks!
It’s not just about the condo’s appearance when first launched, as building management and on-going maintenance of common areas are vitally important factors!
Unfortunately there are several examples in Bangkok of condominiums, falling into disrepair and turning into “investment traps”. Condos can very quickly age through wear and tear therefore it is important to have an efficient and dedicated Management Team.
Adding on to Point Number 2, several Top Developers have taken Building Management into their own hands and set up Facilities Management Companies to ensure value for their buyers!
4. CBD Expat Rental Market
While there is rental demand in all four corners of Bangkok, the most lucrative market for investors in terms of value and volume is concentrated in the Central Business Districts. It is also important to note, that it is mostly Foreigners/Expats that rent in those neighborhoods!
5. Old and New Condos Difference in Prices!
A general rule of thumb, is newer projects are generally sold at higher price per/sqm when compared to older condos. So it is possible to find widely varying price ranges, even in Bangkok’s prime-areas (I.e. Phrom Phong, Asoke and Ploenchit).
6. Condo-by-Condo Investment Decisions
In Bangkok the popularity and appeal of an area is not enough to determine the investment potential of a condominium project or individual property. Interestingly, it is quite common to find terrible developments that under-perform even in the ultra-prime locations.
Property investments need to be evaluated on a project-by-project basis evaluating the positives and negatives of that building. It is also important to go a step further and evaluate the builds merits and potential disadvantages compared to neighboring condos.
7. Bangkok Rental Yields
Standard Rental Yields in Bangkok range from 4-6%.
A general rule of thumb, newer condos offers lower rental yields (4-4.5%) and the older condos can generally offer high yields (5%+).
8. Vacancy Periods
It is always important to do careful research into the rental demand for a specific area and general popularity of the condo before buying!
In Bangkok potential tenants are faced with a large amount of rental choice, therefore if the condo is unpopular it may sit empty for an extended period of time!
9. Foreigner Property Mortgages
This is a popular topic, and the short answer is:
“Yes, it is possible for foreigners to get a mortgage in Bangkok”
However, very few financial institutions offer Foreigner Loans and those that do have very stringent requirements.
Secondly mortgages offered, tend to be at comparatively less competitive rates and conditions (I.e. Higher LTV and Lower Payback Periods) compared to Thai Citizens. Generally it is only advised to seek a Mortgage as a foreigner when buying a home!
10. Property Agent Commission and Finder’s Fee
It is important to note that in Bangkok, the Property Agent’s Commission is paid by the Landlord. Therefore there should be absolutely NO “finder’s fee” imposed on the buyer or investor!
