Neil McDonough

Buying condos in Bangkok

A brief look at investing in Bangkok property


Whilst starting to write this article, in fact even when devising this article, I am imagining many of you will be rolling your eyes thinking ‘I'm on a teacher's salary how does this writer expect me to invest in a property in Bangkok?' Well that might be your first thought, but I have met quite a few farang teachers in Bangkok who have either bought their own property to live in or even as an investment on a buy-to-let basis.

Firstly let's look at basics, for those that have never looked into such an idea, what are the best avenues that are presented to you in the Thailand property market?

Buying property for a foreigner in Thailand is not quite as easy as buying property for a Thai in most of our countries. Certainly in the UK where I come from, we openly welcome foreign buyers and I understand at present many wealthy Greeks are buying up property London. But in the recent past it has been Russians that have been buying up property in London, proving you don't have to be an EU citizen to have property rights in the UK.

In Thailand though it is a little more difficult and buying land, detached houses or even townhouses is difficult, and somewhat discouraged by the Thai authorities. For a start you will need to either buy it 100% in a trusted Thai person's name, like your spouse, or form a company that you can own 49% of and purchase the property through that. However with 30 year land leases and business taxes upon selling the property, this is neither the securest or cheapest way to own property in Thailand.

So that leaves you with condos, and these present not only the safest and most practical way to buy property in Thailand, but also often the cheapest as studio condos can start at just 25sqm in size and when you are buying by the sqm, then costs are obviously reduced. For more information on buying a condo in Thailand, please see this previous blog:

So now we are concentrating on purchasing condos, a form of property that you can own 100% in your name, and at a reasonable cost. As you will be owning this property as an individual and not a corporation, you will not be subject to business tax upon purchase or sale.

So now, the following questions are outstanding:

1. Where to buy?
2. What to buy?
3. What are other farang teachers buying?

Well for the answers to these questions I'm going to lean towards buying Bangkok condos for investment and not really for buy-to-live. The reason for this is that those that buy-to-live do so not only for economic and practical reasons, but often for emotional reasons and this can often be the overriding factor. If I was to speculate on the emotional reasons for buying one condo or another, then we could go on all day.

Where to buy?

As I have little or no experience of buying, renting or selling condos outside of Bangkok - except for one time buying and selling a condo in Hua Hin - I'm going to stick to Bangkok. Not only is this the area I'm most knowledgeable on, but also it is the largest single property market in Thailand, and the fastest moving, meaning that you will have more chance of renting out your property or making a decent profit on it when you come to sell it.

And to focus in further, rather than buy around the suburbs or outskirts on Bangkok, it is better to focus on the city center and more specifically the MRT and BTS routes. It is more than likely that if you are buying to let, then your tenants will be foreign and they often want to live within easy travel or even walking distance of a train station. If you are buying to live, then again much the same applies, you or your spouse or friends probably want to have the convenience of getting about on the train easily, and with an average of 2.5mins travelling time per stop, both the BTS and MRT beat Bangkok traffic almost 365 days of the year.

Of course most train lines run along the Silom, Sukhumvit, Sathorn, and Ratchadaphisek roads, and not only have these area proved to be perennial favorites for expats living in Thailand, but have of course also become the focus for large amounts of condo construction over the last 5-10 years.

By buying in these areas you are practically guaranteeing the future occupants of your Bangkok condo the convenience of the train and also international outlets such as shops, restaurants, bars and cinemas. Not to mention hospitals with English speaking staff, a major concern for retirees looking to live and rent in Bangkok.

What to buy?

Well of course this is often dictated primarily by what level of investment you can or want to make. But I just want to make one point here, if you have enough money to buy either 2 smaller units or 1 larger then always choose the smaller units, and in particular studios.

In recent times there has been a large reduction in the amount of well paid expats in Bangkok living on large salaries and expenses packages. This is not just true of the West, but also of Japanese and Korean expats. A combination of political unrest, competition from SE Asian neighbors and higher degrees of competency amongst Thai management staff has meant a reduction in the need for international companies to employ expensive expats.

In fact, although I certainly do not claim to be an expert on the teaching world of Thailand, it was interesting to note that during the recent political unrest involving the Red-Shirts, quite a number of expats returned home and many companies closed their Bangkok or Thai branches. But teachers were still gaining emploment and this industry proved to be remarkably resilient. I think it is safe to say given the percentage of Thais that can speak a high level of English, coupled with the regular growth in Thailand's GDP, that teachers and language teachers are going to remain in demand and the industry will grow in the decades to come.

If I had been writing this article 3-4 years ago, I would have immediately suggested that you buy off-plan as the best deals could be found in this market. However times have changed and so to has the market. Now often the best deals can be found upon building completion, i.e. resale units!

With many a Thai and foreign speculator being caught our by changing economic conditions, a good quality agent can help you find a deal where the original owner has to sell fast to avoid losing the money they have deposited, which is often a substantial 25 - 30% of the value of the property. And of course in addition to taking a bargain, you have the security of knowing the building is complete and can assess the quality of both the condo unit and the building in general, something a person buying off-plan cannot do.

So in terms of property, that means that a safe market to aim for is housing for teachers. Therefore buying attractive well located and well facilitated studio condos is a market worth aiming for.

What are other teachers buying?

Well basically they are buying what has been described above in areas such as Ratchada, On Nut and Thonburi, where less expensive units can be found, within 100 - 200m of a new BTS or MRT station.

One teacher I was recently talking to who lives and works in Sukhumvit, has recently bought two studios, off-plan in his case, within 50m of the On Nut station. He understands that he'll probably be able to lease these units out for approximately 12,000 baht each and this he tells me will cover the mortgage he obtained in his Thai wife's name. As a young married couple, these properties managed correctly should provide a decent and strong investment over the coming years. And as land prices, building material prices and inevitably labor costs increase, the price of their property will increase whilst it's being paid off for them by their tenants.




Comments

I suggest when the baht crashes and goes to over 40 baht to the dollar and the prices of condos in Bangkok crash 50%, then I would consider. Right now there is a bubble.

By khun paen, (7th June 2013)

You missed a very important point.

Either off-plan or already built - only buy a condo from a company that is listed on the SET (Stock Exchange of Thailand).

Those companies are better funded and the build quality is better. You will avoid many problems this way.

By lord lucan, Bang Na (18th December 2012)

ive been here 10 years now, and back then there were people saying the same thing. dont buy dont buy! Since then there has been war, strife, global recessions, and no solid gov. yet the condo market never crashed, the baht never crashed, houses still hold value, condos have risen as has rental prices. And the cost of living/food etc has definitely doubled.

The rules of back home dont apply here, Asia is on the rise, the west is falling. BUY NOW!

By dj, Bangkok (2nd August 2012)

Hi Neil, I would like to get in touch with you to invite you onto our TV program to talk about buying / renting property. Is there a way to do so?

By Shannon, Bangkok (8th December 2010)

BUYING TO RENT

In general, when people stop buying homes, the demand for rented accommodation becomes greater, and with it the cost of rent increases due to that rise in demand. So if a condo can be purchased NOW at a price where a rental fee is equal to, or greater than, the mortgage on that property (should there be one), then the price is right for buying.

If the cost of property is so inflated that a rental couldn't possibly cover the monthly mortgage fees, then now is perhaps not the right time to buy a property to sublet.

When buying to rent, and that rent covers the mortgage, it's a safe investment. If property prices fall, this does not mean your rents will fall, it just means that new investors will buy cheaper and get a better return on their rents. The global trend is that rents increase over time, not decrease. The same can't be said for real estate investment, which can and does see ridiculous highs, and depressing lows over the years.

Not everybody buys property, and not everybody wants to, but everyone has to live somewhere no matter what! So providing a property purchase is in a good building, a convenient location, and is well maintained by both landlord and project management, then finding tenants should never be a issue for those savvy investors.

I buy + You Rent = YOU buy for ME. Of course, many people don’t purchase bricks and mortar as an investment, but merely as a home, somewhere to live. Buying a property outright (paid in full), to reside in as a home, means you'll always have somewhere to live come hell or high water! Unfortunately, the same can't be said for renting!

BASIC NEEDS OF MAN!

Even if your landlord's a lovely person, kind, compassionate, and cares deeply for his fellows, he's still in the business of making a buck to support his own survival and that of his family. This means he's gonna kick you out eventually should you not be able to pay the rent. So buying property is not always about a financial investment, but one of survival and security too. After all, shelter is one of the basic needs of mankind, yet not everyone has that luxury.

There will surely be a few reading this that would happily spend a few million down the Cowboy over the years, yet wouldn't dream of putting such cash into a condo of their own!!!

Aitch

By Aitch, http://www.mrroomfinder.com/Articles/Ajarn-Renting (22nd August 2010)

There's a huge condo bubble. I believe the condo market will eventually crash. The high prices cannot be supported because the average person earns a low wage. There are too many condos being built and not enough buyers. Also, you can rent an apartment for a low price. I'd only consider buying a condo if the prices literally dropped by 50% or more.

My advice, don't buy a condo in Bangkok now. Wait until the bubble bursts. Right now I can buy a condo in many American cities cheaper than I can in Bangkok.

By Steve, Bangkok, Thailand (29th July 2010)

I can't see condos holding their value or being a very good investment. There was a report out a month or so ago stating that supply of condos in Bangkok has already outstripped demand. So not a very worthy investment, if you are smart you will buy a townhouse in the areas mentioned or buy an apartment in your own country and rent that out.

By Jonty, Bangkok, Thailand (27th July 2010)

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