Property Investment in Bangkok

bangkok-living-sukhumvit-hotels-malls
Sukhumvit: the largest expat community in the city

Bangkok is a sprawling metropolis with an ever increasing number of property developments all over the city. Foreign investors interested in investing in Bangkok properties will find it highly beneficial as the return on investment is large and relatively quick. Compared to other Southeast Asian cities, the price per square metre is significantly cheaper for the majority of urban properties.

The condo and housing markets are viable options for foreign investors interested in purchasing properties in Bangkok. At both the high and low end of the cost spectrum, there are condos and houses that fit within the frameworks of any budget. It is not at all uncommon for foreigners to buy such properties and rent them out while they increase in value.

Although Thai law has strong restrictions on foreigners owning land, those with a substantial amount of capital are still able to work around the law and invest in Bangkok property. The current trend is to buy land on the outskirts of the city, where several gated communities house large homes and space is plentiful. Properties farther away from central Bangkok are also less expensive. The most common means to own a house is by proxy via a Thai spouse or nominee, although you will have little support in court if a dispute arises in this casual arrangement.

Buying a condominium in Bangkok is a more affordable and feasible route for foreign investors. Thai law permits foreigners to purchase condominium units as long as no more than 49 per cent of all the building’s units are foreign-owned. When buying and investing in properties in Bangkok, it is best to consider the area and proximity to local transportation, as these factors are indicators for price.

Sukhumvit Road is the most popular area in the Thai capital for foreign investors who wish to buy or invest here. Housing the largest expat community in the city, about 70 per cent of condos purchased by foreigners are situated in this area, known for its many international restaurants and shops. Other popular areas include Lumpini, Sathorn, Silom, and the riverside area. It is here that many multinational businesses are based and they typically supply the largest proportion of potential foreigner leases.

A large number of international developers have targeted this sector, such as industry leaders Raimon Land, who continue to push the boundaries with world class luxury buildings, sometimes with private pools. Evidently, the city has plenty of money and there are few limits at the top end, but many more condos and apartments are offered via numerous agents in a robust market.

Thousands of new units come onto the market each year and the growth rate of the city’s property sector makes them a safe bet. Typically, a new generation of condos has been emerging in recent years, appealing to the ever increasing expat community. Wealthy Thais are joining them and there is good prospect for real estate investors in Bangkok to buy and lease out at returns of eight per cent or more.

Prices range from 3 million baht (about US$100K) for a modest condo up to 70 million (about US$2.3M) for prime penthouses with river views. The median cost is roughly 20,000 per square meter in typical expat areas. The expansion of the transport system has lead to speculation and the prospect of rapidly increasing value in certain areas.

Bet you didn’t know that! The Asian Financial Crisis of 1997 started in Thailand, caused by fiscal irresponsibility and speculation on an overcooked Bangkok property market. Later dubbed the ‘Tom Yum Goong’ crisis, it threw the country’s economy into a dramatic tailspin that looted its foreign reserves and saw the baht’s value plummet 40 per cent in three months. Even many years later, abandoned shells of skyscrapers dot the skyline and some local observers say it’s only a matter of time before it all happens again!

Suburban Bangkok properties are typified by the ubiquitous housing estates (moobaans) that are favoured by the emerging middle class. Long stay expats have also migrated far out to these oases of calm. Some buy as investments and rent them to Thai and foreigners alike, but ownership has to remain in a Thai name. The downside of these, however, is the commute through Bangkok’s congested traffic, although this applies to nearly all property investment in the Thai capital.

Assistance from Property Report – Asia’s leading real estate magazine.

Further reading…