There is no denying it, Bangkok’s real estate market is in the midst of a slowdown…
After years of relentless project launches and a hectic construction frenzy, the market has now suddenly slowed to a crawl!
2020 is a year of uncertainty for Bangkok’s real estate market; with a slowing Thai economy and the possibility of a global recession, spooking developers and investors.
However, economic conditions are not the only factors that have contributed to this slowdown. Other factors such as the strong Baht, a property supply glut and the Bank of Thailand’s stringent new rules on mortgage approval have had a cooling effect on the property market at large.
On top of this, the Thai Government’s “New Land and Building Tax”, that aims to reduce income disparity, will come into effect as from August this year. This new legislation will impose taxes on the landlords and holding companies that are monopolizing the supply of property and land, especially in the Capital.
Speculators Out, Contrarians In.
Is it all doom and gloom?… Are there any real estate investment opportunities left?
Since the end of last year, Fresh Property has experienced an increase in “contrarian investors”. These individuals pride themselves in “bargain hunting” for attractively discounted property, in what they perceive as a depressed market!
A correction is underway, interestingly jittery landlords and developers are for the first time taking a realistic view on the sales price of their properties; with some accepting lower profits or even accepting losses. Discounts are available on anything from unsold developer stock, off-plan resale contracts to secondhand condos.
Amazing deals are now suddenly available for investors willing to move fast and take risks!
Why are some property sellers accepting reduced profits or losses? … Is the market in bad shape?
Fresh is a modest real estate agency with only a limited view on the macroeconomic market conditions.
However, it is important to note that so far Fresh has not experienced many motivated sellers with “negative equity or debt repayment issues”!
Instead from general interactions with Sellers, the 3 main “Profiles” of motivated sellers seem to be as follows:
Real Estate Portfolio Rebalancing
Many Thai sellers are simply taking a conservative approach and reducing their level of financing. Many landlords are accepting to take “reduced profits” for their properties, consolidating equity in their more profitable units.
International Buyers Offloading
For many of these investors, buying a property in Bangkok was a speculative bet to try and capitalize on fast profits rather than a long-term investment. Therefore, with uncertainty looming, some speculators have been keen to off-load and move-on.
Another common type of seller are expats that are leaving the country. Many prefer to sell their units fast, rather than have the hassle of managing a rental investment from overseas.
Examples of the types of hot deals currently on the market:
Completed & Transferred Deals!
Hot Investments Currently Still Available!
Investment Opportunities for Risk Takers
The reduced price expectations of sellers and the uncertain economic outlook is inevitably creating a unique investment environment!
Discounted real estate is an appealing opportunity that savvy investors could potentially use to their advantage. As “cheaper” condos offer the benefit of higher rental yields and potentially higher resale profits.
However, as the saying goes, higher returns also means higher risks…