What makes the property market in Bangkok both interesting and challenging for those looking to live or invest here? Here’s a look:
by Christopher Scott Dixon.
Judging by the ever-growing number of real estate developments sprouting up around the city, the rather recent gloomy economic forecasts seem to have been largely ignored: there is a rush to construct ever bigger and taller living and working properties in the capital.
Property developers, in fact, see the sector growing 5-10% nationwide this year, particularly in Greater Bangkok, and that percentage is expected to remain in that level at least until 2020. This is because of the government’s strong investment in infrastructure projects, which in turn, opens up new land for property firms to develop residential schemes.
Thai law stipulates that “aliens” are not permitted to own land in the kingdom. If you are interested in buying, you have two options as a foreign investor: either through a 30-year leasehold, or by purchasing the property through a limited company. It is worth noting that foreigners can purchase apartments as long as Thais own at least 51% of the building.
With the lease idea outlined above, this arrangement is quite unusual. In the vast majority of cases, it happens when a foreign man marries a local woman. The wife, as a Thai citizen, buys the land and stipulates a lease agreement with her foreign spouse.
The second suggestion is to buy land through a business and set up a Thai limited company. Remember that, as stated, you cannot hold half, or more than half of the company’s shares, as a foreigner; the firm has to be at least 51% Thai-owned.
Most foreigners decide to purchase a condo or apartment to live in, but again, it can only be bought in his or her own name provided that at least 51% of the building is owned by a Thai citizen.
Demand for homes close to the two mass-transit systems-BTS and MRT is said to be increasing steadily. The Onnut district tops the appeal table with a target price of around Bt2.5-million per unit. This can rise, however, as high as Bt3-million or Bt4-million. The most popular unit size ranges from 35 to 40sqm.
Where to live
When choosing where to live, it is vital to think not only about commuting time but also somewhere that is as stress-free as possible: close to shopping malls, markets, and more crucially, maintains a high level of security.
One landlord usually owns apartments in the city center, and all the units in the building will be in their possession.
A condo unit is usually part of a larger building, which is then rented out by a landlord. Facilities are generally superior to an apartment with swimming pools, fitness centers, and saunas etc. With good locations, they provide the extra benefits of longer-term contracts for tenants, utility bills with no added premiums, more personal attention and a stronger community feel than apartments.
Town houses are another choice and are in general owned by one landlord. Locations are usually less convenient than other accommodation and may require you to use other public transport if not near the BTS or MRT. Facilities are inferior to condos or apartments, but you gain more space at the cost of convenience. Utility bills are similar to condos with a standard rate. With a detached house be aware of hidden expenses, which include maintenance and much higher rent.
Surprisingly prices for newly commenced condo projects in Bangkok can be as much as four to five times higher than for older buildings. These are driven not only by location but also the age, design, specification of the building and its management and maintenance.
There are significant differences between old and new in a number of prime investment locations in the city such as Sukhumivt and Sathon and Lumpini.
In the latter, Somkid Gardens formerly regarded as a top quality condo, can re-sell for THB 120,000 to THB 140,000 per sqm and yet new high-rise developments in the neighboring area are being purchased for more than THB 300,000 per sqm.
There are a number of reasons for this striking gap. Historically, the vast majority of condo buyers are Thai and there has been a traditional reluctance to occupy “second hand” property. Design issues with old properties are often a problem too; a lack of an attractive lobby area can deter purchasers.
Many older units have ceiling heights that are as low as 2.4m compared to their modern counterparts with heights of 3.0m. The actual layout of the buildings can be poor, although the sellable area may be more than 300sqm, the fact that some rooms have a column in the middle decreases the utility of the space and is arguably no better than a new 200sqm – development.
Purchasing property to live in or invest is really up to the individual and their particular needs, budget, lifestyle and ambitions.
Many property buyers opt for professional advice and hire a real estate agent. Most, but not all, will be foreign firms. They can save you time, have the professional expertise and experience and will match both listed and unlisted properties for you. Their fees are usually paid by the seller and generally total 3 – 6% of the purchase price. Research the property agents carefully. Word of mouth recommendations and testimonials are vital. Ask questions and thoroughly test their knowledge of the area you are thinking of living or investing in.
Do your homework, have a solid financial and business plan, get the correct advice, and whether you choose to invest or live in Bangkok you’ll be laying solid future foundations!