Opportunity Abounds

Experts agree: In general, Thailand remains an attractive proposition for real estate and property investments.

by Percy Roxas.

One doesn’t need to look deeper to see the frenzy of real estate developments going on in Bangkok today. A casual drive through the major thoroughfare of Sukhumvit alone, where construction after construction continues to proliferate, easily gives you an idea of how “crazy” the developments are going up.

Thailand remains a favored destination for those considering real estate or property investment, indeed. And why not? The market remains buoyant because of a number of factors: the generally low cost of living, a stable baht (well, relatively), a range of affordable services, and a more relaxed lifestyle. In addition, there is still a growing Thai middle-class with money to invest and a rising cash sector with foreigners seeking to live and work here. And recent indicators suggest that Thailand – especially Bangkok – will continue to be a highly sought-after location in Asia.

Bangkok already boasts a wide variety of quite distinctive commercial and residential districts, including Sukhumvit, Sathorn, Silom, Chidlom, Thonglor, Ekkamai, and Langsuan roads. Most of these areas are already home to many foreigners, and not the least because they are near to the skytrain network and other transportation modes — a key factor to ponder when purchasing property. Closeness to work, medical, retail, and recreational amenities are other crucial points to discuss before signing a contract. If you do have your own vehicle, however, then you have more freedom to move beyond the city center and research other districts, which may not be as visually attractive and celebrated as the above mentioned, but might provide you an opportunity to buy less expensive property.

And it’s not just in the big metropolis, in fact. Besides those in the capital, a growing number of property developers and brokers are now operating in Pattaya, Phuket, Hua Hin, Koh Samui, and even Khao Yai. But not surprisingly, Bangkok is the getting the biggest chunk of the cake, and in a manner of speaking, it is still the main market for property investors and buyers.

CONDOS

Depending of course on budget, lifestyle, expectations, and specific priorities, the options for property buyers are appealing yet also perhaps bewildering with a list that includes luxury penthouses, condos, apartments, houses, villas, and townhouses. The most affordable and popular accommodation purchase especially in the Bangkok area is a condominium.

Competition is fierce among property companies and owners and it is very much a consumer driven market. Here are some condominiums that are getting a lot of interest, or are selling fast — if not yet fully sold out:

Vogue at Sukhumvit 16 and 31 offer contrasting but complementary choices of accommodation. Vogue 16, ideally located within easy reach of BTS Asoke and MRT Sukhumvit, has a modern and contemporary feel. The living rooms make effective use of space and light to create an inviting interior. It is a low-rise building consisting of eight floors and 240 units, with one- and two- bedroom apartments.

The sister condominium on Sukhumvit 31 has 74 units, a friendly urban environment, and facilities which are equal to that at Vogue 16 with a swimming pool, steam room, and fitness center.

Ashton Morph 38 on Sukhumvit 38, named after the ash tree, boasts modern, sophisticated interiors complemented by what is regarded as an architectural marvel of a design concept in a lush urban environment. The Millennium Residences, located along Sukhumvit 16-20, is another ideally placed property with an excellent variety of facilities and set among green landscape and relaxing water features.

Farther up the BTS line, the Park Chidlom–with its impressive residential buildings that consists of two towers 28- and 35-stories high—is hailed as a unique design and with its art deco crowns, the entire construction resembles some of the finest residences overlooking Central Park in New York. In an area of more than five-and-a half rai, there is ample space for the swimming pools, recreational facilities, reflecting ponds, and lush greenery. As expected, the interiors of the exclusive residences match the exteriors, with high ceilings and floor to ceiling glass in most of the living areas, master bedroom and dining rooms to increase the effect of spaciousness and elegance.

At Thonglor Soi 4, there is Quattro –‘The Masterpiece Condominium”– one of Sansiri group‘s most ambitious projects. In the heart of trendy Thonglor, it boasts cutting edge interior and exterior design, with a superb range of facilities and living features more than worthy of the title, “masterpiece.”

MahaNakhon, advertised as Bangkok’s most prestigious address, is situated between Silom and Sathorn roads close to the BTS Chong Nonsi station. The aim is living at its most luxurious including the 200 Ritz-Carlton Residences, outdoor landscaped public plaza, high-end retail center, and a boutique hotel with 150 rooms.

The buyers? The buyers themselves can be a mix of retirees who have relocated to Bangkok and are wanting a home to relax in; younger working professionals who are employed by large companies in the city and need a base; those who are seeking a second holiday property away from their own country; and others who are aiming to purchase houses/condominiums for rental purposes or to upgrade and sell later to other buyers or tenants.

More have since risen up of course. According to CBRE Research: “Despite the sluggish state of the overall economy, there was a 96 percent increase year-on-year (Y-o-Y) in downtown condominium launches in Bangkok. After launching very few midtown and suburban projects in Q1, developers returned to the market in the second quarter, launching more than 16,800 new condominium units, an increase of 116 percent quarter-on-quarter (Q-o-Q).”

“We have seen mixed results in terms of sales of newly launched condominium projects,” CBRE Research continues. “High sales rates have been achieved in some projects that matched buyers’ expectations in the downtown area as well as the midtown areas on the fringes of downtown. We believe that the buyers of these successful projects were not only end-users but also speculators and buy-to-rent investors.

“However, many entry-level midtown and suburban condominiums have been struggling with sales.

“The pressure from the large number of midtown and suburban condominiums expected to be completed this year, coupled with the lower level of demand due to tighter lending criteria, has contributed to stagnant sales in the midtown and suburban areas. Over 72,000 midtown and suburban condominium units are expected for completion this year with almost 32,000 units to be completed in 2016. The risk remains as to whether speculative buyers of these units will default if they cannot resell before completion and how many end-user buyers will be able to get mortgage loans from banks with tight mortgage lending criteria.”

Looking forward, CBRE Research thinks overall condominium sales will be slower, especially in the midtown and suburban market. “Developers will use a wide range of tools from soft discounting, like free furniture packages, to hard discounting by actually reducing the prices of completed units to clear inventory,” it says. “More developers are going to try and launch projects in the downtown market, which is perceived as being stronger, but not every project will be able to capture buyers’ imagination and money.”

HOUSING

Many buyers also prefer a house in a housing project, rather than an individual dwelling, because of the availability of central management services, which should include the following: 24-hour security, regular garbage collection, common area cleaning and laundry. Again it is not only the quality of the property, which should be researched but the quality of the shared facilities, as they do contribute to the overall value of the house. By definition, a larger housing project would tend to have more amenities, and might include a swimming pool, fitness center, or convenience store.

In fact, more foreign buyers are heading to the suburbs, searching for middle to lower-priced housing. The fact that there are fewer high-rise buildings in areas such as Thonburi is seen as a plus by many. It is also welcomed by those with children, as several international schools are situated in areas such as Bangna.

According to CBRE Research, the supply of serviced apartments in Bangkok as of the Q2 stood at 14,150. “Two serviced apartments were completed and two apartments were converted into serviced apartments during this quarter. Occupancy rates increased by 6 percentage points year-on-year to 81.1 percent in Q2 2015, due to the low base effect arising from the political turmoil in Q2 2014,” it says.

“In Q2 2015, the supply of apartments (single ownership multi-family buildings) in the downtown area of Bangkok totaled around 11,750 units, increasing by 0.4 percent Q-o-Q and 0.3 percent Y-o-Y. Two new apartments located in the Sukhumvit area were completed with a total of 49 units.”

CBRE Research also added that the small number of Japanese expatriates moving back to Japan has a negative effect on the occupancy rate in some serviced apartments, although overall long-term rental rates rose by 3.3 percent Y-o-Y. Which area posted the highest average asking rent rates? The Central Lumpini area with THB 1,260 per sqm per month, CBRE Research tells us.

THE BROADER SPECTRUM

On a broader scale, the real estate and property market covers not just condominiums or housing of course. There’s also the retail and office segments, the hotel developments, the industrial and investment sectors, not to mention the island villas sector outside Bangkok.

For a more detailed analysis of the current state of the industry, we recommend a look at the CBRE Research website. CBRE’s “Bangkok Property Report” provides in-depth analysis of the Bangkok real estate market, including property supply and demand, occupancy, take-up, prices, rental trends, and other indicators.

For the rest of you, our foreigner friends who are here to buy some property, it is advisable to do your detective work first. There are several methods of finding property: by looking online, scouring the local newspapers and watching out for signs may be posted in the neighborhoods.

The vast majority of buyers can opt for the more sensible and stress-free route by hiring real estate agents or brokers. Some advice: Choose those with local knowledge, experience, and skills for the most accurate and up-to-date advice.

Many of the companies also provide legal services, and it is highly recommended that you get professional legal representation before you decide on where to put your cash. — with the LE team