04 Apr Real Estate Investment and Potential in Thailand: An Overview Through 2017
Just like a passenger jet hurtling through the sky at 800 km/h, Thailand’s real estate economy seems to have a clever way of withstanding heavy turbulence.
In recent years, the country has faced floods, political instability and, more recently in 2016, the death of His Majesty the King. Despite all of this, investor confidence in 2017 remains high, which is reflected in both property prices and the number of new construction projects being commissioned up and down the country.
Almost every sector of the market has experienced continual growth year-on-year for the previous 13 years; for example, housing data scraped by the Bank of Thailand shows that condominium, townhouses and land prices nationwide have increased by between five and 12 percent every year since 2008.
While growth has been sluggish in the capital, experts are predicting a mini-revival of the luxury property market in Bangkok in the latter part of 2017 through to 2018. Factors such as heightened Chinese investment, major infrastructure projects being completed (such as new MRT and BTS lines) and more favorable overall economic conditions are expected to catalyze local purchasing, with Thais making up around 85% of the market. Currently, there are over 1,000 brand new luxury properties on the market (defined as units costing over THB 10 million) in Bangkok alone.
As we know, Thailand has an ample supply of cultural cities, pretty coastal towns and tropical islands drawing in foreign investment for obvious reasons. Phuket remains the hottest destination for foreign buyers thanks to its fairly-well developed infrastructure (including an international airport) and diverse choice of modern, boutique-style properties which typically range from THB 7 million to THB 16 million.
Other consistently popular buyers’ markets include Bangkok, Hua Hin, Pattaya, and Koh Samui. In fact, Koh Samui has seen some of the most significant increases in land prices in recent years, as investors realize the strong rental yields that this island promises. This is also coupled with the government’s current push to attract ‘quality’ tourists who hold high spending power, namely from Europe, America, China and Japan.
Similarly, the resort of Hua Hin, for decades, the favorite of the Thai Royal Family continues to flourish, and remains a popular destination for foreign buyers, boasting beautiful beaches, a thriving arts scene, and several world-renowned golf courses. A recently opened ferry service from Hua Hin to Pattaya, with a journey time across the Gulf of Thailand in less than two hours, plus the future construction of the high-speed train line to Bangkok and beyond, adds to the appeal for foreign and local buyers alike.
The northern city of Chiang Mai has also started to attract buyers looking for more affordable property prices, with a three-bedroom townhouse close to the city center generally available in the THB 2 million – 7 million bracket.
While Thailand’s real estate market presents huge potential, anybody looking to turn a short term profit will have one eye on the pitfalls. One of the major hurdles for foreign investment in Thailand is the strict restrictions placed on ownership of a property. However, those not holding a Thai passport can readily purchase condominiums, if Thai ownership makes up at least 50% within the development. Villa and house ownership is easily accessed by non-Thai investors, thanks to the variety of leasehold developments available to the foreign investor.
Compared to the more rapidly growing markets of Hong Kong and Singapore where such restrictions are not enforced, this is often seen by both local and foreign investors as counterintuitive.
The fact remains, however, is that Thailand is a more attractive investment market (compared to nearby Southeast Asian countries) for both property developers and buyers thanks to a multitude of reasons. As long as Thailand remains on the top of that ‘bucket list’ for millions of people worldwide, as well as continued infrastructure and business, we can expect that the real estate market’s resilience to stay strong.