Purchasing foreign housing remains the most profitable investment format. A good investment solution could be buying a condominium in Thailand. One of the largest countries in Southeast Asia attracts tourists all year round, making investments in local housing potentially profitable. Let's consider whether it is worth buying property in Thailand, and what kind of profit foreign investors can expect.
- Why Thailand?
- Can I rent out my condo after purchase in Thailand?
- Monthly rent in Thailand
- Return on investment for rental property in Thailand and taxes
- Difference between residential and commercial real estate investments
The global real estate market has a wide range of choices, which is why many may have questioned why it is worth investing in this sunny kingdom rather than focusing on other countries. There are several reasons to buy an apartment in Thailand such as:
- Affordable cost of living and comfortable climate conditions that attract tourists and expats and make apartments in demand.
- Steadily developing economy, contributing to the development of infrastructure, urbanization and growing demand for apartments and houses.
- Attractive real estate prices. After the situation with the pandemic has stabilized, they are steadily growing, you can buy apartments for rent in Thailand much cheaper than in resort locations in the USA or European countries.
- Return on investment, regardless of whether you choose a long-term rental strategy or resell your apartment.
In the Kingdom of Thailand, there are practically no restrictions related to nationality when buying or selling a condominium, so any foreigner can buy an apartment and dispose of it at their discretion. It is only important to take into account that, according to local legislation, foreign nationals can own only 49% of the real estate within one residential complex.
Foreigners can buy an apartment for rent and rent it out themselves or use trust management companies. This is the easiest way for those who do not live in the kingdom permanently. The real estate agency takes care of housing maintenance, searching for tenants and all payment issues for a commission fee.
Companies offering property maintenance service work on a contract basis and can ask for either a fixed fee based on the area of housing or a commission fee on the rental rate.
It must be taken into account that if a foreigner rents out real estate on their own, it is seen as equivalent to running a business. In this case, either a work permit or setting up your own company with the right to carry out entrepreneurial activities is required.
The owner must report each tenant to the Immigration Department. However, this rule applies to any person temporarily residing outside the place of registration. Even if relatives or friends come to visit, immigration registration is required or the owner will face a fine.
When deciding whether to rent out an apartment in Thailand, it is important to consider several points:
- The rules of the condominium, which are adopted by the general meeting, must allow the use of housing for rental. If there is a ban, you cannot rent out the apartment. We recommend you clarify this question before purchasing.
- Condominiums are not classified as hotels. Therefore, short-term rentals are only permitted if official non-hotel status has been obtained. To do this, a notice is sent to the local county office stating that the condo does not meet the requirements of a hotel and supporting documents are attached to the notice.
- There are special condominiums that are initially sold as hotel apartments. In this case, the investor seeds capital money in the housing stock and subsequently receives a profit through the loyalty program. The only downside is that the owner cannot move into their own home at their discretion. According to the contract, they are allocated a certain period during which they also have the right to stay in their apartment. Typically, the free interval varies from 14 days to a month. As a rule, such a housing arrangement brings the highest income to owners.
It is important to know that you can rent out not only an apartment but also a villa in Thailand. For villas, more flexible rules apply, but only in a situation where the number of rooms does not exceed four. Otherwise, a license is required.
There are no universal prices. The rent consists of several components such as:
- housing area and number of rooms
- degree of comfort of the residential complex and what additional amenities it has
- development of regional infrastructure
- proximity to the sea coast or central attractions
- distance to the international airport
Therefore, apartments can be rented out for between USD 150 and USD 500.
Those planning investments are naturally concerned with the question of whether it is profitable to rent out an apartment in Thailand. The amount of profit depends on the area where the apartments are located and the number of rooms. By region, the average yield in 2023 has been as follows:
- In Bangkok, the return on investment for a studio apartment reaches 6.85% and for a one-bedroom apartment, it is 5.63%.
- In Pattaya the figures were 7.69% and 6.36% respectively.
- In Phuket, a one-bedroom apartment can ensure up to 10.66% per annum.
But even in this case, the cost of renting out a condo in Thailand differs according to the area and specific location. Therefore, before purchasing, we recommend studying in detail the latest current data on rental rates within the selected locality.
Buying an apartment in Thailand requires paying taxes. Income tax is paid on rental profits. It is calculated using a formula in which expenses incurred for housing maintenance are subtracted from the total amount of income, after which the resulting figure is multiplied by the tax rate. It is progressive and depends on the amount of income. The rate varies from 5% to 35%. If income is received outside the kingdom, there is an additional taxation of 15% on profits.
Those planning a rental business should be aware that data on income and expenses from real estate for the year must be saved. At the end of each year, a financial return is required to be submitted to the tax department. Regardless of whether the property made a profit or not, this process must still be undertaken according to Thai law.
Foreigners cannot purchase commercial properties as private property without registering in the kingdom. Real estate is required to be registered in the name of an open local Thai company or a jointly created enterprise which bears citizenship. In the latter situation, 51% of the shares must be owned by a Thai citizen. In other cases, you can own a commercial property on a leasehold basis.
The basic difference between residential and commercial properties is the rental term rates. Commercial spaces are not rented out for 1 month. As a rule, a contract is concluded for a year or more. However, the ROI for such options is almost double the profit from renting out apartments and can reach up to 12% per annum. In addition, the initial investment in the commercial option does not necessarily exceed the cost of purchasing housing. Everything depends on the specific object, its type and area. A small office or beauty salon, hairdresser, or nail salon will not cost much more than buying an apartment with several bedrooms.
At the time the article was published, an analysis of advertisements showed the following prices for renting office spaces:
- In Chonburi, an office with an area of 135 square metres was offered for USD 1,435 per month.
- In Bangkok, office space with an area of 320 square metres was rented for USD 3,400 per month.
- In Nonthaburi, an 825 square metre office could be rented for USD 2,240 per month.
The largest number of offers on commercial premises is concentrated in Bangkok. Pattaya and Phuket remain regions aimed at meeting the needs of the tourism sector.
Here are the key points that we mentioned in the post:
- Can a foreigner buy an apartment in Thailand? Yes.
- Will this investment be profitable? When buying real estate in a prestigious area, it will bring profit.
- Is it worth buying commercial real estate for rent? Commercial properties can bring significant profits, but it is important to choose a sought-after field of activity and a location with a minimal number of competitors.
- Can a stable income be guaranteed? As in the rental business sector of any country, it is difficult to give clear guarantees. However, the kingdom has a high potential for further development, making investments potentially profitable.
On our comprehensive real estate platform, you will find all the latest offers, among which you can choose apartments not only for investment but also for relocation. Our specialists will help you choose and buy an apartment in Thailand.