Making money on real estate in Thai is not limited to citizens of the Kingdom; foreigners can also benefit. Compared to other investment methods, buying a Thai apartment or house to resale, or rent it out involves minimal risks. As the region is a popular holiday destination, there is always a high demand in buying and renting real estate.
Content:
- Market prospects in Thailand
- How to make money from real estate in Thailand
- Prospects of rent business in Thailand
- The best cities in Thailand for investment
- Real estate market in Thailand
- Real estate prices in Thailand
- Short-term rental
- Long-term rental
- How to choose a prospective property in Thailand
Market prospects in Thailand
To understand whether you can make money by investing in real estate in Thailand, let's look at the market prospects. After the lifting of the pandemic restrictions in 2021, the country saw a significant recovery in tourist inflows, which had a positive impact on the Thai economy.
In 2023, the Kingdom will rank 2nd in total GDP and 4th in nominal GDP per capita within the Association of Southeast Asian Nations (ASEAN). According to the forecast of the National Bank, the country's GDP in 2024 will be +3.8% and inflation will be +2.4%.
The economy is growing due to the following factors:
- Increased consumption by the local population
- Recovery of the tourist flow
- Growth in private and public investment
An important indicator of economic stability is the minimal change in the exchange rate of the local currency over the last 10 years. In November 2023, 1 US dollar was worth 35.5 Thai baht. In 2013, the exchange rate fluctuated between 32 and 33 baht per dollar. Similarly, inflation has rarely exceeded 3%.
Exports are the mainstay of Thai's GDP, but tourism also makes a significant contribution, accounting for 20% of total GDP. Most visitors come from Europe and China. The majority of foreign buyers of apartments and houses is Chinese citizens.
How to make money from real estate in Thailand
Investing in property in Thailand is profitable not only because of the rental income, but also because of the constant increase in real estate prices. Owners can sell at a profit at any time. The highest rental income in Thailand comes from properties that are consistently in demand by potential tenants, usually residential complexes located in resort areas and the capital.
One of the most important factors in determining rental income is the attractiveness of the real estate to potential tenants. Over time, residential complexes become outdated, and new and more interesting offerings to tourists and residents appear on the market. That’s why many investors constantly monitor the release of new properties and try to sell their assets when it reaches its maximum value.
One way to maximize the return on investments in Thailand is to buy a condominium during the construction phase. At this point, the developer sells the property at a discounted price, and by the time construction is completed, its price will have increased by up to 30% from its initial value. In many cases, such an asset can be resold within a week of its completion.
Prospects of rent business in Thailand
Even in the development stage of a future complex, the developer determines its purpose:
- Residential complex without hotel brand management.
- Hotel complex for short-term rentals in Thailand In this case, the investor essentially buys a room in the hotel. This is an excellent option to those who simply want to generate a stable income. Since such complexes are usually managed by a hotel brand, owners do not have to worry about constantly finding tenants. However, there are some drawbacks to such projects. As an example, many management companies place a limit on the owner's stay in the units, and there may be specific finishing and furnishing requirements.
In popular tourist areas (Phuket, Pattaya), as well as in Bangkok, rental income from short-term leases can reach up to 10% per year.
You can also consider buying apartments or villas in Thailand in an emerging market. Regions where a stable tourist flow has not yet been established fall into this category. Examples include Samui, Chiang Mai, Krabi and Hua Hin. The main advantage of buying such property is its affordable cost and the prospect of its increasing in value as the region develops.
The downside of buying investment property in an emerging market is that the return on investment may take longer due to lower rental rates in less popular tourist areas. By comparison, the cost of a hotel room in Phuket can be as much as $60 per day, while a similar room in Samui will be half the price.
The best cities in Thailand for investment
Traditional favorites among Thai cities to buy investment property are Phuket, Pattaya and Bangkok.
Phuket, known to be its sandy beaches, national parks, golf clubs and well-developed recreational infrastructure, is often chosen by tourists from Europe. The west coast of the island, where beautiful beaches and a well-developed resort entertainment sector are concentrated, is the most popular area. Attractive rental areas on the island include Mai Khao, Nai Harn, Patong, Karon, Surin, Bang Tao, Nai Yang and Nai Thon.
Unlike the resort areas, Bangkok is a full-fledged metropolis where many Thais and foreigners move to work and conduct business. As a result, there is an increased apartments and studios demand.
Real estate market in Thailand
The cost of housing in the Kingdom increases by 4–5% annually, with the most noticeable price growth in the tourist regions. Phuket is the leader in popularity among travelers and expatriates. Low-rise condominiums are being built on the island and are in high demand by tourists.
Foreigners can buy Thai real estate, but with certain restrictions. Condominiums can be purchased with perpetual ownership, while other properties, including land, can only be held under long-term leasehold. The regulated term of the use of leasehold property is 30 years, with the possibility of two extensions of 30 years each. It's important to note that freehold apartments usually cost 10-15% more than similar leasehold properties.
Mortgage in Thailand is not only available to citizens. However, foreigners prefer to use interest-free installment plans offered by developers during the construction phase. Some major developers in Phuket offer a payback scheme to their customers. Under this scheme, the buyer pays the apartment during the foundation phase and the developer pays 5% annual interest on this capital during the construction period. This method allows buyers to purchase an apartment at a bargain price at the start of sales and generate income from it even before the condominium is operational.
Real estate prices in Thailand
Real estate prices in Thai vary greatly depending on the region. Property on the west coast of Phuket, as well as in central areas of Bangkok and elite complexes in Pattaya, will be more expensive. Costs will be lower in condominium complexes located in towns farther from the beaches, as well as in coastal areas that are not as popular with tourists. In addition to location, apartment, studio, and house prices are influenced by:
- Year of construction
- The presence of additional amenities in the complex
- Layout type
- Views from windows
- Quality of interior finish
In Phuket, the starting cost of a studio or small one-bedroom apartment typically starts at $110,000. Villas and townhouses are priced higher, starting at $300,000 for a small house. Premium apartment options can also be found on the island with prices starting at $330,000 and up.
Cost of property maintenance in Thailand are relatively low. The average monthly cost of water and electricity is around $59. Residential complexes with amenities such as a pool and gym may have additional maintenance fees.
Short-term rental
Short-term rental of property in Thai is one of the ways to maximize income. In resort areas, profits can reach up to 10% annually.
Today, investors can purchase apartments and studios in modern condominium complexes managed by hotel brands. In this case, the buyer enters into a contract with the management company, which takes care of all rental-related procedures, including advertising the complex, finding clients, preparing apartments to check-in, maintenance, cleaning, and more.
There are several ways to share profits between investors and the management company. If the property is new and not well known to tourists, it is more advantageous for the owner to choose a fixed income. In Phuket this can range from 5% to 7% per annum.
Once the hotel complex has established a stable guest flow and the income from each unit is increasing, the management company may offer other profit-sharing options. For example, the total income may be shared between all unit owners and the management company.
Long-term rental
Long-term rentals in Thailand, compared to short-term, yields lower returns. In Phuket there are several areas suitable to buy real estate with a view to a long-term lease. These are typically locations further away from the beaches and popular tourist spots. The demand for such accommodation is created by expatriates and individuals who come to the warm country during the winter season.
How to earn on real estate in Thailand? Despite the lower income, long-term rentals allow investors to be less dependent on high and low tourist seasons and simply earn a stable income throughout the year. Another advantage of long-term rentals is the lower barrier to entry. Away from the sea, it's possible to find apartments starting from $70,000.
Long-term rental properties can also be rented through an intermediary. Usually, you can contact a real estate agency and give power of attorney to an agent.
How to choose a prospective property in Thailand
In order to obtain the maximum possible income from villas or apartments in Thailand, it is advisable to make a purchase through a reputable broker or directly from the developer. When selecting an investment property, it is important to consider current market trends, rental demand in a specific area, and several other factors that determine future profitability. It is important to consult with a professional who understands the market.
You can find a trustworthy agency or a reliable developer through our website. In our catalog, we collect offers from verified developers and real estate agencies. This allows you to compare prices and offers from different sellers. A variety of filters help you quickly find properties that meet your specific criteria. You can also view all listings from a specific developer, which is convenient because many developers offer great discounts and bonuses to investors who buy multiple apartments at once.
We regularly update the catalog with listings of upcoming projects, so you can instantly learn about new lucrative offers and choose the optimal investment option.