Among real estate investors, Thailand is quite well known for its lavish mansions in resort places along the Andaman Sea and the Gulf of Thailand coasts. However, Bangkok's capital city has recently become an even more appealing option for investing in housing properties. The city's transportation infrastructure is noticeably improving: a new metro line was opened in 2020, and a new underground metro line is currently being under development with the last station due in 2027.
Thailand's capital is consistently listed among the Top-Ten best cities for expats to reside in. InterNations, the global largest expat community with over 4.5 million members, ranked the city as the fourth best city in the world to live in in 2021. In a similar study conducted in 2022, Bangkok took sixth place, overtaking cities such as Basel, Melbourne, Abu Dhabi, and Singapore. Foreigners are pleased with the low cost of living in the capital (noted by 69% of respondents versus 45% on average worldwide), the affordability of housing (70% are satisfied versus 39% globally).
Bangkok ranks number one in the world in terms of convenience for overseas nationals in the housing sub-category. Thailand's economy recovered from the coronavirus pandemic's recession faster than neighbouring countries in 2022. The combination of a high demand, a positive outlook for the local economy, and low entry costs into the housing market has led to a rise in the number of foreigners looking to buy property in Thailand, especially in Bangkok.
Content:
- Prices for renting
- How to purchase an apartment in Bangkok and make money out of it?
- The best districts of the capital
- Target areas of Bangkok for investment
- Cons of property acquisition in Bangkok
- Land plots
Prices for renting
The average rate of return for Bangkok residences is 4.45%. At the same time, the profitability spread varies greatly depending on the specific district and type of residential property: this rate ranges between 1.89% and 8%. The following are the most important factors to consider when investing in Bangkok’s real estate:
- The neighbourhood where the residential property is situated;
- Apartment's type (a studio, apartments with one, two, three, or more bedrooms);
- The age of the building;
- Facilities and services available in the housing estate.
Properties in the Phra Khanong district have the highest return on investments in Bangkok. The owners received 6.39% of the property's value per year from the lease of a studio in this area in 2022. At the same time, real estate in Phra Khalong is reasonably priced. The most expensive houses for sale in Bangkok are in Pathum Wan, the capital's central business district. Owners who rented studios here earned 4.04% of the apartment's value in 2022.
According to official statistics, Bangkok rental prices have not yet returned to pre-pandemic levels. At the same time, tenant demand for housing at the end of 2022 grew drastically by 88% in the third quarter of 2022 compared to the beginning of the same year. This gives realtors hope for an increase in Bangkok’s rental price index in the near future.
How to purchase an apartment in Bangkok and make money out of it?
In Bangkok, several new residential projects are currently being under construction. They sell apartments, townhouses, and detached houses. Potential buyers can select housing estates that will be commissioned in a few months or pick an off-plan project in Thailand that will take several years to complete. Because demand for residences in new homes in the country outstrips supply, residential properties in new projects are frequently sold out within a few days of the announcement of the start of sales.
The significant and almost guaranteed profit from resale is one of the reasons for the high demand for real estate in such residential complexes. When reselling new residences under construction in Thailand immediately after their completion, owners can make a profit of 25-30% of the amount paid for this property.
Developers are frequently willing to offer instalment plans for the purchase of housing in new residential projects. The first instalment is usually only 20-25% of the total cost of the unit. With such favourable terms, investors frequently purchase multiple apartments at once. When the residential complex is finished, the investors sell one or two of the ready-made dwellings and use the proceeds to pay off the instalment plan for the remaining apartments. After that, they can receive a net income from the apartments they still own through rent.
The best districts of the capital
Bangkok is divided into 50 districts (khets). The city is not located on the coast. The city's central business and historical areas are the most popular among potential buyers, tenants, and tourists. Housing with stunning views of the Chao Phraya River, which runs through the heart of the capital, is extremely popular.
Pathum Wan's central area, known for its most expensive real estate in the capital, is situated near the river. Its cityscape is dominated by high-end office and residential skyscrapers. The quarter also includes:
- Shopping malls;
- Museums;
- The Royal Bangkok Sports Club, known for its horse racing venue;
- Lumphini Park.
A studio in a finished new building in Bangkok with an area of 27 m2 in the Pathum Wan quarter can be purchased for $220,275. Within the territory of the complex, swimming pools and park areas with beautiful installations will be available to the owners.
Khlong San, another popular area, is located on the opposite side of the river from Pathum Wan. Housing options in under-construction complexes can now be found here. For example, investors can get a 46-m2 two-bedroom apartment for $188,110. The dwelling as well as the residential complex where it is situated will be commissioned in 2025.
Target areas of Bangkok for investment
Pathum Wan and Khlong San are the most sought-after Bangkok areas for tourists, buyers, and tenants. The cost of residential real estate in this region is rising year after year, and there is a particular demand for new properties with all amenities. If you purchase a unit in a complex under construction in these parts of the city, you can almost triple your investment after resale. The cost of entering the local real estate market, on the other hand, is relatively high.
Real estate investors who want to get into the rental business can purchase a residential property in areas with a high demand for short-term rentals. For example, the well-known Silom district, which is home to numerous nightclubs and bars. Because the Sukhumvit area's luxurious nightlife attracts more affluent tourists, there are few budget residences and mostly luxury apartments. Luxury lodging is also available in the Riverside area. This quarter appeals to wealthy tourists interested in culture. Riverside is home to numerous live music venues, theatres, and museums. Tourists choose Chatuchak area for family vacations. If you are considering entering the rental market in this quarter, you should purchase large houses that can comfortably accommodate a family with children.
Potential investors should also keep an eye out for new residential projects in Bangkok areas along the under-construction Purpoon underground metro line. According to the experience, the cost of residential properties located within 500 meters of a metro station skyrockets immediately after it is put into operation.
The following Bangkok neighbourhoods will provide the highest profit due to high demand among tenants within walking distance of real estate:
- Phra Khanong — an average ROI of 6.39% per studio a year;
- Chatuchak — an average annual ROI of 5.86% per studio;
- Sathon — an average ROI of 5.85% per studio;
- Huai Khwang — an average annual ROI of 5.33% per studio;
- Watthana — an average annual ROI of 4.44% per studio.
Cons of property acquisition in Bangkok
Purchasing property in Thailand as a foreigner is a complicated process with some drawbacks. Buyers should always consider the nuances that can have a huge impact on the annual income from the rental of purchased housing.
Taxes
There are two options for owning real estate in this country, which both differ substantially. It is essential to comprehend which option best meets the buyer's goals.
- Leasehold ownership does not necessitate the payment of annual property taxes.
- For freehold ownership of housing, you have to pay 3.3% of the house's value per year.
Another way to significantly reduce property tax is to register as a resident. However, foreigners are often not ready to take this step.
Seasonal Downtime
Another disadvantage is that Thailand has both high and low tourist seasons. In the second case, apartments and houses can remain empty for months without tenants.
Unavailable citizenship
Thailand does not allow foreigners to obtain citizenship through the purchase of real estate; instead, they can only get a residence permit. Today, there are several options for long-term visas, whose types depend on a foreigner's income and the amount he can pay for a residence permit.
Land plots
If you cannot afford apartments in Bangkok's popular tourist hotspots, detached single-family houses and land plots are available further out from the central city. A house in Bangkok's suburbs can currently be purchased for around $90,000. Thai authorities began indexing land prices on January 1, 2023. As a result, prices for Thai villas have grown. Their value has increased by 5—8% on average when compared to prices in 2018 (when the previous revaluation of land occurred). The law currently allows foreigners to buy land in Thailand, but the conditions for doing so are quite strict and generally necessitate careful calculations in each individual case when selecting a possible piece of land for investment.
It is worth noting that price changes will affect more than just private houses. Apartment prices in high-rise complexes are also expected to rise in 2023, as developers face increased costs for building plots. The rise in building material prices also contributes to the rise in new building prices in Thailand.