Nobody can deny the attraction of owning a condo in Thailand. The climate, culture, cost of living and the relatively low level of capital investment, all make investing in the kingdom a desirable prospect.
Last year, a lot of foreigners visited the kingdom, and in 2020 the number of visitors is projected to increase. During their stay, many of these visitors will reside in a condo they have purchased, others will rent. Many will come away from their holiday with a blossoming idea of buying their own property in paradise.
In addition to the impressive visitor numbers, there is also the level of expats living in the kingdom. Although exact figures are difficult to ascertain, the last official census in 2010 had the figure at around 2.6 million. Estimates now put that figure at well over 3 million. The increase in the numbers is due to working expats and retirees being attracted to life in Thailand.
Thailand’s popularity has made it an attractive proposition for investors since the implementation of the 1979 Condominium Act. This act is, from a legal point of view, straight forward and easy to navigate. It has made it possible for foreign investors to own condos outright in their own name.
Since the implementation of the act, foreign investors have been clamoring to get onto the property ladder in the country. This thirst for ownership is quenched by an ongoing boom in property developments in the most popular and profitable areas of the kingdom. So, where is all the foreign capital being invested?
Purchasing a Condo in Bangkok, Thailand’s Colorful, Multicultural Capital
Capital cities in all countries around the world attract people, be it for tourism, business or commerce. In that respect Bangkok is no different to any other capital. Since 1979 the concrete explosion in Thailand’s principle city has been undeniable and impossible to overlook.
New tower blocks dominate the skyline. Glass and steel have risen up out of the ground with some stunning architectural designs. Buildings on a monolithic scale for business, retail, leisure and residential purposes nestle side by side in an ever-expanding Bangkok. Each of these elements feeds off one another, and collectively, they are there to satisfy the population explosion.
Our modern digital world has been the main catalyst for Bangkok’s exponential expansion. The city has always been popular with tourists, but it is technology which has seen it grasp the opportunity to attract global businesses. Companies from around the world can now work remotely from just about anywhere, and with Bangkok being the hub of Southeast Asia it is the perfect center for Asian operations. To accommodate new business and its personnel also requires a supporting infrastructure, which means yet more people. As a result, since 1990 Bangkok’s population has almost doubled.
Areas along the city’s BTS Skytrain routes are the most densely populated and developed. Business and commerce are supported by restaurants, bars, retail complexes and high-rise condominium buildings. The Central Bangkok District (CBD) is the most expensive and desirable location within the city. There are 5 areas making up the CBD. Siam Square, Sathorn, Silom, Wireless Road and Sukhumvit Times Square. These areas have top end retail and leisure facilities along with luxury condominium tower blocks.
The top end condos in the most desirable areas obviously carry the highest prices. To purchase a condo in the CBD area, prices can be as high as 70 million Baht for a 1-bedroom unit and as much as 100,000 baht a month to rent. More realistically, purchase prices start from around 4 million Baht and rentals from around 8,000 Baht a month. Between the higher and lower end of the market, there are prices to suit most investors’ pockets.
Some Possible Downsides to Purchasing a Condo in Bangkok
Bangkok’s importance as a Southeast Asian business and commercial hub is not likely to fade anytime soon. However, due to the seemingly unchecked, incessant level of building, there is very likely to be a future glut in the condo market. That will not be good news for future capital growth and rental yields. Financial gains are sure to slow down, although there are no predictive figures that indicate the market will actually move into negative growth.
Buying a Condo in the Tourist Hotspot of Pattaya
Pattaya has been a popular tourist destination for many years, and has grown in size along with its popularity. The resort city is a favorite for tourists from all over the world and tourism has become the mainstay of its economy. With the tourists comes the expansion in local attractions to please and entertain. Shopping malls, restaurants, bars and clubs are to be found all across this ever-burgeoning city. All these infrastructural facets require people to operate them, adding to the population.
Accurate population figures for locations such as Pattaya are, at best, sketchy. The registered population is a little over 100,000, but the true figure is much higher. This is because indigenous workers that migrate to the city remain registered in their home towns, thus, they do not appear in any official census figures. It is now believed that the number of migrating workers far exceeds the local registered population. Add to these an expected 16 million tourists and it is easy to see why there has been a relentless drive of residential building projects throughout the city.
Many tourists have moved away from booking package tour holidays and are opting to book flights and accommodation separately. For many years, this has made the condominium rental market a good investment opportunity. Local workers, tourists and an ever-increasing number of foreign retirees, have fueled the demand for condominiums right across the pricing spectrum.
As with any other location, prices of condos in Pattaya vary greatly. At the top end of the market, a 1-bedroom unit can fetch as much as 10 million Baht. Conversely, at the lower end of the spectrum a condo can be bought for as little as 600,000 Baht. This pricing variation is reflected in the rental values. A 1-bedroom condo in central Pattaya can be as low as 6,000 Baht per month, and up to 70,000 Baht for a luxury unit.
The Downside of Condo Investment in Pattaya
Since the implementation of the Condominium Act 1979, Pattaya has followed Bangkok in the building boom. Eager to attract foreign investment and to exploit the city’s appeal, condominium blocks started to spring up across the city, along with the necessary infrastructure. It is easy to think that the expansion has been exploitative and unchecked.
Pattaya is now starting to suffer from a glut in the condominium market. Capital growth and rental yields have slowed dramatically over the last 5 years due to over-supply. The resale market has been hit particularly hard, there are now hundreds of condos on the market, some of which have been on sale for several years.
This leveling, and possible shrinkage, of the condominium market is an important factor to be considered by any prospective investor. It may give the purchaser leverage when negotiating a deal, but this must be balanced against lower future returns and possible resale difficulties.
Condo Investment in the Northern City of Chiang Mai
Chiang Mai, founded as a city in 1296, is in Thailand’s mountainous North and has been popular with tourists for many years. The city has a registered population of around 150,000, in addition to this there are many thousands of non-registered migrant workers and foreign retirees.
In recent years the city has become a desirable location for “Digital Nomads”. With more and more people being able to work remotely, Chiang Mai has seen an increase in workers within the digital field. No longer is it necessary to suffer the stuffy, congested cities for the sake of work. Hours spent fighting through Bangkok’s rush hour is a far cry from a commute in Chiang Mai, you can easily travel from one side if the city to the other in half an hour.
Be it tourists, workers or retirees, Chiang Mai is an idyllic location. With its abundant natural beauty and relatively low cost of living, the city is an attractive proposition for foreign investors. Purchasing a luxury 1-bedroom unit can cost up to 20 million Baht, at the opposite end of the scale a condo can be bought for well under 1 million Baht.
Rental returns are reasonable and steady throughout the city. A high-end, 1-bedroom unit can realize up to 50,000 Baht a month. At the other end of the market, a reasonable 1 bed unit can fetch 6,000 Baht a month. Capital growth and rental returns are likely to remain healthy; this is partially due to the city not falling victim to an excess of building projects.
Are There Any Negatives to Condo Investment in Chiang Mai?
Certainly, Chiang Mai has managed to balance attracting investment without spoiling its unique quality of life. But, not having a crystal ball, we cannot be 100% sure of the future. Future administrations may take the city down a different road, changing its economics and demographics. Although it must be said, currently, there are no indications of this happening.
At this current time, the biggest concern residents have is that of air quality. This is mostly due to farmers burning the fields after cropping. Last years that has been exasperated by forest fires, but field burning throughout the Northern region remains the primary cause of the poor air quality. This is unlikely to change unless, or until, legislation forces farmers to adopt new methods of clearing their fields.
Phuket, Investment in Thailand’s Popular Southwest Island
Nestling in the Andaman Sea off the West coast of Thailand’s Southwestern leg, is the island of Phuket. This mountainous and rain forested island has been a favorite of tourists for many years. It can boast many high-end resorts and excellent beaches. Patong is the principle resort town with hundreds of restaurants, clubs and bars.
The last official census in 2015 showed a population of around 387,000, estimates now has this figure at over 400,000. Of course, these figures do not include the fluctuating number of non-registered workers that service the tourism infrastructure, which is sure to be many thousands. There are no official figures for the number of expats living on the island, but speculative estimates put the number at anywhere between 25,000 and 100,000.
Currently, there are around 60 major condominium developments underway on the island, plus a plethora of smaller private building projects. New developments are quoting rental income from 5% to 10%, the top end figure of 10% may be a little optimistic. A 1-bedroom condo can be acquired for under 2 million Baht, conversely, a high-end 1-bedroom unit can cost up to 10 million Baht.
Typically, rent for a 1-bedroom condo starts at around 8,000 Baht a month. For a luxury 1-bedroom unit in a prime location, expect to pay 35,000 Baht. Pricewise, there is not a great deal of difference between the East and West side of the island. The East looks towards the mainland and has views of numerous other islands, the West faces the cerulean waters of the Andaman Sea. Both sides of the island are subject to the continued building of condominium blocks and the associated infrastructure.
Is There a Downside to Investing in Phuket?
Phuket has for a long time been the subject of complaints regarding its public transport. The government has repeatedly failed to successfully address the problem, and numerous private bus companies have also failed to implement an effective, reliable service. Year by year traffic congestion gets worse, and taxi and tuk-tuk drivers have a reputation of being pushy and aggressive towards foreigners.
Some beaches, Patong Beach in particular, have suffered some water pollution, gaining only 2 out of 5 stars on the clean water scale. Phuket also gains above average complaints from tourists about, jet-ski rip offs, jewelry scams and taxi drivers refusing to turn on the meter. The Tourist Association of Thailand has reported that, although Phuket tourist numbers are still rising, the number of returning tourists has fallen significantly. Perhaps a cautionary tale.
Investing in the Charming Cha Am – Hua Hin and Pranburi Districts
Southwest of Bangkok, and within easy traveling distance of the capital is Cha Am, in Phetchaburi province, and within a few kilometers South is Hua Hin and Pranburi in Prachuap Khiri Khan province. These areas are largely un-spoilt and can boast long, clean beaches that stretch along its coastline. The area has a natural beauty, clean air and is largely devoid of concrete, it also has a leisurely pace of life. Local restrictions on building projects have helped the area maintain its beauty whilst still being attractive to foreign investors.
According to a 2008 census the population of Cha Am was under 26,000, in 2017 the estimated population in Hua Hin was 63,000 and Pranburi 7,000, and these areas have very few non-registered migrant workers. There are a few expat retirees in the area with more and more enquiring, and seeking out opportunities for investment in this un-spoilt area.
In these 3 areas a basic condominium can be bought for under 2 million Baht, and at the high end of the market luxury units can sell for as much as 70 million. The rental range is extensive with a comfortable 1-bedroom unit obtainable for 6,000 Baht a month and luxury condos realizing as much as 70,000 Baht a month.
The Negatives of Investing in the Cha Am – Hua Hin and Pranburi Districts
These areas are going to be less appealing to anyone that enjoys an energy packed lifestyle. There are no streets of neon with bars and clubs where music throbs through to the early hours, and there are no glitzy, chic shopping malls. You won’t find a motorbike taxi on every street corner or a plentiful local bus service. If you are looking for action and want everything at your fingertips, maybe this stretch of the Southwest coast is not for you.
Across the country, Thailand has something for everyone. All investors have different whims desires, and expectations, and with every area there are pros and cons. Some investors view the options in a purely business manner. Others are looking for their retirement investment. Most are seeking something in between. Buy now, rent out, retire later, this is now a common approach of many potential investors.
The long-term, multi-lateral view may be the ever more popular approach, but it is also the hardest to accommodate. Finding a property that will offer value for money, give good rental yield, and yet still be a property where you can see yourself retiring, is a hard call. Of the 5 locations covered here, Pranburi is perhaps the safest bet for the multi-lateral approach.
Pranburi is not, and is unlikely to ever be, over exploited, this is largely due to the newly introduced Tourist Investment Plan. This plan encourages only projects that are in-keeping with the local environment. This seems to be allowing Pranburi to move along seamlessly with the ever-evolving economics and investment requirements of the area, without ever being out of step. This approach leads to stability, which is good news for investors.
This small town is now of particular interest to investors with a multi-lateral approach to investment. Their focus is the project, Grand Marina Pranburi. This is an exciting, quality development with its own unique geography. The rental yields are expected to be high; capital growth is sure to be excellent, and as for retirement, it’s perfect.