Going into 2019 an article of this nature, may come-off as out-of-touch with reality and borderline misrepresentation.
Indeed, overlooking the tepid outlook of Bangkok’s property market would be denying the obvious. Residential property will face numerous headwinds going into the New Year, with numerous indicators of this trend already flaring up sporadically in the press.
Some highlights include:
– The Bank of Thailand has imposed tighter regulations on mortgage lending with a more stringent set of loan approval requirements. These changes will see increased loan-to-value (LTV) ratios imposed on buy-to-let investors. The new measures will be effective as from the 1st of April next year.
– Mixed end-of-year financial performance from residential developers. The industry is reporting a slower take-up rate, resulting in developers scaling back on new launches. This has led many of the leading Bangkok Property Consultancies to openly forecast a cloudy outlook for 2019.
– Global economic uncertainty, primarily led by the escalating US-China trade dispute is putting strain on the Thai economy.
General market sentiment is bearish and this lack of investment confidence is understandable. The Capital’s property market may have temporarily lost its shine, however the Editorial still believes that Bangkok’s fundamentals still hold strong.
This shift in sentiment should be welcomed as a refreshing break from all the hype and unwanted frenzy of previous years. The sobering reality emphasizes the renewed importance of investing for the long-term and conducting cautious due diligence when purchasing property.
Initially brushed aside in favor of hot tips and fast profits- “Common sense and a cool head” will be important qualities for investors in 2019!
So what are some practical tips for investing into the New Year?
1. Refocus on Established Locations
The frenzy of previous years hyped “exotic” non-central locations that promised enormous returns. This trend was often underpinned by the promise of new transport infrastructure, major commercial projects or the gentrification of the neighborhood. Putting the investment spotlight on areas such as Bang Sue, Rama 4 and Bang Na; while these location’s still have potential, it will likely take time for the residential market of those neighborhoods to develop to their full potential.
A slower and harder investment climate, means investors are encouraged to refocus their attention on locations that have already established themselves as residential and business hubs. This means focusing their property searches in Bangkok’s Central Business District or in locations only 1 or 2 stops away from prime locations!
2. Selective Buying
Fresh Property always advocates the selection of well-located (Within or close to the CBD), high-quality and well-managed projects. Resale condos throughout the Capital in both prime locations or outer Bangkok often offer amazing bargains hidden in plain sight.
However tougher market conditions are likely to make sellers uneasy and result in even bigger opportunities to locate good deals.
Investors are advised to buy selectively, conducting careful due diligence by comparing price per square meters and rental rates of condos in the immediate vicinity. Only by factoring and comparing local market info, can a deal be negotiated and a successful investment acquired.
The “buy low, sell high” mantra, although cliché will be the key to successful investments going into 2019!
3. Off-Plan Bargains?
While developers are likely to offer promotions and discounts for their Projects in the New Year, the real bargains in off-plan are likely to come from speculators, who were never intent on transferring. Interestingly, there are already a good number of resellers looking to flip their off-plan contracts for a variety of popular projects completing in Q1/Q2 of 2019.
The same level of caution and selective buying is advised, and investors should request a full disclosure from off-plan resellers about exact final price and installment schedules. Also it is important for potential investors to recheck if there is a discrepancy between the local and foreign quota units; as unfortunately several foreign buyers inadvertently purchased at large premiums, compared to their local counterparts.
Off-Plan units from resellers, tend to flood the market especially when the completion date approaches and this can be an opportunity for hard negotiation and good deals.
Final Words: Investing in 2019 and beyond…
Underlying these strategies are the simple concepts of conducting robust market research and investing selectively. Going into 2019’s tepid market, it is important for investors to focus on the basics investing based on 3 fundamental factors:
1. Convenient central locations within a few meters from BTS/MRT.
2. Quality Projects by established Developers.
3. Comfortable units in Projects offering a great lifestyle.
Keeping it simple and investing in established projects and areas, is likely to be the safest and most lucrative way to continue to make money in the challenging conditions ahead!