Bangkok Property Investment: A Guide to Buy-to-Let Condos

Bangkok is a booming business and startup hub, with important geographic, political and economic clout in the heart of the South East Asian Region. On top of this, the city is a top destination for travelers and expats from around the world. Especially those, looking for a balance between professional opportunities and an enjoyable relaxed lifestyle.

This positive tailwind, has inevitably had a knock-on effect on Bangkok’s urban landscape and real estate projects both commercial and residential have been booming.

The City is in a state of flux and is rapidly transforming with mega infrastructure projects such as extension of the Mass Transit Lines (BTS and MRT Lines), neighborhood redefining mega mixed-used projects (Such as One Bangkok, Icon Siam, etc.), and finally the skyrocketing price of real estate in the prime areas of the city.

 

 

This combination of factors has transformed Bangkok’s residential property market into one of the most dynamic and fast-paced in the region. With active buy-to-let investors both local and foreign amassing lucrative rental income producing condo portfolios!

Why Invest in a Bangkok Buy-to-Let (BTL) Rental Condo?

 

 

Bangkok’s rapid economic, urban and social development is inevitably fuelling a rise in the price of the Capital’s real estate. This is directly translating into higher capital appreciation and stronger rental yields.

However, putting these factors aside, compared to other real estate markets in the Southeast Asian region, Bangkok offers several distinct advantages to medium and long-term rental investors:

1. Relative Value and Capital Appreciation Potential

While prices of Condos especially in Bangkok’s Central Business District have risen to unprecedented levels; with many observers speculating that this constant rise is unsustainable. It is important to note, that the dramatic price hikes reported, are generally for newly launched (In many cases off-plan) projects.

However, most resale condos on the secondary market are priced significantly cheaper compared to their off-plan counterparts in the same area. On top of this, several resale projects are offered at significant discounts and generally offer great value considering location, rental yields and quality of the building.

Any savvy investor looking for a value investment with upside capital appreciation potential, should definitely scout Bangkok’s secondary market for bargains!

2. Rental Yields and Occupancy Rate

Bangkok’s rental market is definitely a “tenant’s market” with potential tenants spoiled with a variety of rental options; however, this should not dissuade potential BTL investors. Good condominiums are always in high demand and rental yields generally average between 4-8%.

Bangkok is Thailand’s biggest urban center, continuously accommodating an influx of working professionals (Thai and Expat); this results in an expansive pool of potential renters. While occupancy rate can definitely be an issue for some unpopular buildings, Bangkok’s Central Business District tends to benefit from a healthy and consistent rental market throughout the year!

3. Low Resale and Rental Income Taxes

Property is a popular investment asset in Thailand. Interestingly, the country’s taxes and fees with regards to selling a condo (Even after only 1-2 years of ownership) is incredibly generous and there are no rules or regulations restricting the number of properties an individual can own.

While it is beyond the scope of this article to go into details of how to calculate personal income tax; it is also important to note that Income Tax on rental income is generally low, especially when compared to other countries in the region.

What are Bangkok’s Condo Rental Yields?

 

 

As briefly mentioned above, generally condos in Bangkok offer Gross Rental Yields between the ranges of 4-8%. Many factors can a influence the level of rental yields that can be achieved notably:

  • Location (Central Bangkok or Outer Bangkok)
  • Project & Condo Condition (Developer, Age and Quality)
  • Purchase Price (Motivated Seller, Buying Direct from Developer, etc.)

While each investment opportunity needs to be evaluated independently, Bangkok’s real estate market usually follows certain trends:

– Rental Yields <4 – 4.5%

New condo project launches (Under 1-2 years), usually only achieve rental yields of 4-4.5% (Or lower). This is usually because of their higher purchase price and the fact that upon completion of a new project, there is usually an influx of rental competition.

The advantages of investing in new projects (Under 1-2 Years) are lower maintenance expenses during the tenancy as the condo unit and its appliances are usually defect free!

– Rental Yields 4.5-5.5%

Most condos offered on the secondary market will offer healthy rental yields between the ranges of 4.5-5.5%. If negotiated correctly and if marketed at the right rental price, rental yields between 5-5.5% are generally a standard in Bangkok’s Central Business District.

– Rental Yields 5.5%+

High rental yields above 5.5%+ are definitely a possibility, especially considering Bangkok’s large choice of neighborhoods and wide selection of condominium projects.

However, it is important to note that high yields above 6%+ can often come with certain drawbacks, negatives and compromises. This can include factors such as location (Distance from mass transit or Outer Bangkok locations) and age of the building (Very old buildings in need of maintenance).

What are the Costs of Maintaining a BTL Condo Portfolio?

 

 

A big advantage of investing and maintaining a rental portfolio of Bangkok condos is the investment’s low administrative and management cost and expenses. In Bangkok there are no city council or local government fees, and there is no legal requirement to pay for condo unit insurance. It is important to note that utilities such as water, electricity, Wi-Fi and cable TV are usually at the renter’s expense.

With this in mind, here are the general expenses usually involved:

– Condo Furnishing

Rental Contracts in the Capital are usually signed for a period of 1-year and therefore rental condos are usually marketed furnished with all electrical appliances (I.e., Fridge, Microwave, etc.)

– Common Area Management Fees (CAM)

Condo buildings often have common areas and facilities that need ongoing upkeep and maintenance. This service is usually provided by the Juristic Office/ Management Team that is funded through the collection of Common Area Management Fees.

CAM Fees are usually collected one time per year and are usually calculated on the basis of a fixed amount per square meters of the condo (I.e., 30 Baht per square meters). A general rule of thumb is CAM Fees are usually the equivalent to 1 Month Rent.

– Rental Agency Commission

Finding tenants for a Rental Condo is usually done by instructing and engaging Property Agencies. In Bangkok Rental Agencies charge a standard rental commission of 1 Month Rent for a 1 Year Contract.

– Management and Maintenance

Basic on-going management and maintenance can be arranged and organized via the juristic office of the condo.

Alternatively, the landlords may decide to engage a local Property Management Team to delegate the issues associated with renting and maintaining a Bangkok property.

Condo Selection: Important Investment Factors to Consider

 

While some factors can generally be applied to most property markets internationally; this section will aim to provide insight into local standards and practices.

1. Location, Location, Location

Like any property market in the world, location is the primary consideration when investing in rental condos in Bangkok. The rental market in the Capital tends to prefer residential buildings in close proximity to Mass Transit (BTS/MRT); rental prices and demand are usually dictated by this important factor!

Also, foreign investors are generally encouraged to invest in Bangkok’s Central Business District (CBD) or in areas in close proximity to the CBD. This is for practical reasons, as most expats tend to rent exclusively in those areas and most property agencies tend to only service the central areas of Bangkok. Therefore, to ensure stable occupancy rates, it is generally advised to only consider CBD Condo Projects.

2. Condominium Age and General Maintenance

Unfortunately, not all Condominiums in Bangkok are “aging gracefully”, with several condos failing to appreciate in value in-line with market conditions. Unfortunately, badly maintained projects inevitably fail to retain their value instead turning into investment traps.

Therefore, as a rule of thumb it is always advised to consider newer condos (Under 5 Years). On top of this, it is important to ensure that the Building Management has sufficient reserves to maintain ongoing maintenance and is efficiently ensuring the upkeep of the condo’s commons areas. (I.e., Pool, Gym, Lobby, etc.)

3. Developers

Certain Condo Developers in the Capital, have cultivated appealing and desirable brand identities that allow their Projects to stand out. Condominium ownership is generally perceived as a status symbol locally and therefore having a property in a development by a famous builder is usually a positive factor for both the resale and rental market.

On a practical level, the established developers (I.e., Sansiri, Ananda, Noble) tend to have more development experience; therefore, they generally tend to design and develop projects with impressive facilities, functional floor plans and comfortable unit layouts. Generally producing developments with overall better building standard and design.

4. Unit Type

Finally, it is always important to review the Condo unit’s specification ensuring that the layout and size is functional and comfortable. It is also important to consider extra details such as direction, view, and general building facilities (I.e., Pool, Gym, Lounge).

Condo Financing: Can you get a Mortgage or Loan to Buy a Condo in Bangkok?

 

 

This is a popular topic of discussion, especially for rental investors. Buying real estate with financing could potentially leverage returns and increase the number of properties in a portfolio with limited upfront investment!

Thai nationals can obviously apply for loans via a local Thai bank. With the current low-interest rate environment, financial institutions are offering very competitive interest rates and repayment terms. However, for foreign investors (Expats and non-residents), while getting financing is possible, the full answer is a bit more “nuanced”.

It is possible for foreign investors to access financing from local Thai banks. However, the institutions that will offer loans are very limited and in most cases the interest rates and repayment terms tend to be uncompetitive relative to local buyers.

Here is a list of some financial institutions that may offer mortgages to foreigners:

  • UOB Bank
  • ICBC Bank
  • MBK Guarantee

Examples of Bangkok Buy-to-Let Rental Investment

 

1. Condo Project: Line 71

Location: Phra Khanong
Unit Specs: 1 Bed/ 1 Bath/ 31 Sqm. @ 5.8 MB
Price per Square Meters: Approx. 187,000 THB PSM
Estimated Rental Yield: 4-4.5%

 

 

2. Condo Project: Blocs 77

Location: On Nut
Unit Specs: 2 Bed/ 2 Bath/ 61 Sqm. @ 7 MB
Price per Square Meters: Approx. 114,000 THB PSM
Estimated Rental Yield: 5-5.5%

 

 

3. Condo Project: Tree Condo Sukhumvit 42

Location: Ekkamai
Unit Specs: 1 Bed/ 1 Bath/ 48 Sqm. @ 4 MB
Price per Square Meters: Approx. 83,000 THB PSM
Estimated Rental Yield: 5.5-6%

 

4. Condo Project: Mirage Sukhumvit 27

Location: Asoke
Unit Specs: 1 Bed/ 1 Bath/ 35.7 Sqm. @ 6.3MB
Price per Square Meters: Approx. 176,000 THB PSM
Estimated Rental Yield: 4.5-4.8%

 

5. Condo Project: Villa Asoke

Location: Asoke
Unit Specs: 1 Bed/ 1 Bath/ 52 Sqm. @ 6.9 MB
Price per Square Meters: Approx. 132,000 THB PSM
Estimated Rental Yield: 4.5-5%

 

 

Extra Resources for Property Investors

 

 

This short guide only scratches the surface of the extensive subject that is investing in Bangkok real estate!

To help buyers and investors to familiarize themselves with Bangkok’s property market, Fresh Property has published a series of extensive guides and articles. Here are some additional resources that readers may find useful:

General Buyer Guides:

A Foreigner’s Guide to Buying and Investing in Bangkok Condos
Foreign Buyer Guide: Property Mortgage Loans in Thailand
Taxes on Buying and Selling Condominiums in Thailand

Property Ownership Laws:

Can Foreigners Buy Property in Thailand?

Neighborhood & Lifestyle Guides:

Where to Buy Property in Bangkok?
Where are Bangkok’s Next Real Estate Investment Hotspots?
The Best Bangkok Neighborhoods for Expats to Live!

Condo Maintenance & Management:

Bangkok Condo Investment: Ownership Expenses & Maintenance Costs
Bangkok Property Management Options for Overseas Landlords
Property Agency Commission Rates in Bangkok

 

 

Fresh Property is a boutique real estate agency specializing in Central Bangkok!
If you are an investor looking for a rental investment, feel free to visit our new projects showcase or alternatively browse through our resale property portfolio.

2 thoughts on “Bangkok Property Investment: A Guide to Buy-to-Let Condos

  1. I am an american. I am thinking of retiring in Thailand. If I purchase a condo now, can I rent it until I’m ready to move? I have heard that foreigners cannot rent property they own. Then some say you can but you need a working visa. What is the true story?

    Thank you

    • Fresh Editorial says:

      Hi Larry, thank you for your comment. Legally non-Thai nationals are only able to own Condominium Freehold Titles (Condos); you are able to buy a condo under your name on a freehold basis whatever your immigration/residency status (I.e. Business Visa, Retirement Visa, Tourist Visa, etc…) in Thailand.

      So to answer your question, no you do not need a working visa to buy property in Thailand/ Bangkok.

      Regards,
      Fresh Property Team

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Fresh Editorial

The Editorial Team is made up of Property Professionals with years of experience in the Bangkok Property Industry. Articles and reports are drafted using first-hand experience and local expertise!

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