A brief look at investing in Bangkok condos, Thailand’s biggest buy-to-let market.
Investing in Bangkok real estate may seem a daunting and difficult task, but as can be seen from the below blog it can also be rewarding if the investments are made in the correct districts of Bangkok. A Bangkok property investment in a well located Bangkok condominium can yield both a high rental yield and a high yield in capital gains.
In fact highlighted in a recent report by a well-known and highly respected property developer, listed on the SET, states that condominiums in Bangkok’s city center offer on average 7% rental yields across the low-mid, mid and high-end market categories. And the condo resale market within Bangkok remains extremely buoyant despite the economic and political problems of the last 12 months.
Let’s look at some figures, but firstly let’s define some criteria’s we are looking at within our report. Investing in a condominium in Bangkok can range from low-mid end up to high-end luxury Bangkok properties, but all can be found along the BTS and MRT in Bangkok’s city center areas. The main designated areas of Bangkok’s city center are Sukhumvit, Silom, Sathorn, Ratchada and Central Lumpini (near Lumpinin Park and the Royal Sports Club).
Also when we refer to investing in a Bangkok condominium, the main body of the blog will only be referring to brand new condominium projects. In fact none of the condominiums we will have been completed more than 12 months ago. The reason for this is that older units would have been bought at much cheaper, and therefore will neither reflect the current prices of the Bangkok condominiums on the market, or the rental yields as a percentage of the buying price – clearly Bangkok condominiums invested in earlier will yield higher returns as the purchasing prices would have been lower.
For the purposes of this brief blog, we will concentrate in investing in a Sukhumvit condominium. There reasons for this is that Sukhumvit is the most popular district of Bangkok and most foreign buyers invest in condos in Sukhumvit. In the last 12 months there have been approximately 4 500 condominium units completed within the Sukhumvit area of Bangkok. Therefore there has clearly been a large increase in the amount of Sukhumvit condominiums on the market. However this has not stopped the rental yield from remaining attractive, as mentioned earlier with an average 7% return on investing in a Bangkok condo.
The purchasing prices for these Sukhumvit condominiums continues to rise, and on average one can expect to pay approx THB 90 000/sqm for a mid-end Sukhumvit condo, or if you want to invest in a more luxurious Sukhumvit condominium then prices of approximately THB 115 000/sqm are being asked.
Investing in a condominium in Sukhumvit will probably present you with the following returns: For a Studio prices of THB 15 – 20 000/month can be asked; for 1 Bedroom prices of THB 30 – 50 000/month can be asked and for a 2 Bedroom prices of THB 50 – 80 000/month can be asked. Of course all the above depend on several variables such as location, quality of the building, size of the unit and quality of the furnishings in your buy-to-let Bangkok condo investment.
|But what about the capital gains on your Bangkok real estate investment? Well as we saw early some projects have offered Bangkok condominium developers rises of up to 25% since launch, The Address Chidlom being such a Bangkok condo investment.
However on average Bangkok condominiums launched in the last 12 months have offered their investors approximately a 10% capital gains return since their launch. However it has been noted the best resale units in general are the larger 2br units. The reasons for this is that developers are generally building more Studio and 1 bedroom units in the newly launched Bangkok condominium projects around the city center, as these often are quicker to sell off-plan and can offer good rental yields. In addition the 2 bedroom units they have launched are on average smaller than those built in the past, with newly built Bangkok condo units over 90sqm becoming rare. So newly built 2 bedroom units of over 100sqm are becoming relatively scarce in the Bangkok real estate market.
Therefore if you are looking for rental return yields you may be best off investing in a Bangkok condo less than 60sqm in size, such as Studio or 1 bedroom. However if it is capital gains you are looking for in your Bangkok condo investment then a larger 2 bedroom unit of up to 100sqm could be your best Thai real estate investment stategy.