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Invest in Bangkok

NOW’S THE TIME TO INVEST IN BANGKOK

Bangkok is a thriving city of 8.5million, with 14 million in the surrounding greater metropolitan region.

Bangkok is one of Southeast Asia’s most exotic and exciting cities. With a population of 8.5 million (constituting almost 15% of Thailand’s overall populace) and an additional 14 million living within the surrounding metropolitan region, Bangkok is an extreme primate city – at least 40 times the size of any other city in Thailand – dwarfing the country’s other urban centres in terms of importance.

Bangkok continues to experience an inflow of migrants, both domestic and international, thanks to increasing industrialisation, investments and the lure of job opportunities. Rapid urbanisation – the cause of Bangkok’s chronic traffic congestion – has spurred the government to equip the city with integrative mass transport systems including the Sky Train (BTS) and MRT.

RESILIENT PROPERTY MARKET

Mixed sales results in the downtown and midtown – suburban condominium market in Bangkok.

While foreign investment in Thailand’s property market has been known to take a hit in the aftermath of political turmoil, what’s proven is the resilience of the sector. Thailand has reportedly survived some 20 coups since 1912, with the market bouncing back each time. Seasoned investors who know Thailand know that this is how things happen, and the fact is that property demand – more than 95% of which comes from Thais – remain largely unaffected.

The most recent political coup in May 2014 is a perfect illustration: the property sector had picked up by the second half of the year and, overall, performed moderately well.

In general, the real estate market is domestically driven. International demand, meanwhile (led by Singaporeans and Hong Kongers), is normally concentrated in the high-end/ luxury property sector. High net worth Thais have reportedly shown a renewed interest in property, with a generational shift in local lifestyle that sees younger, smaller households relocate to mass market condominiums.

There is also a growing number of expatriates working in Thailand, with most preferring to rent rather than buy residential accommodation. A significant share of the demand from this segment is for large two- to three-bedroom units.

2015 saw a 96% y-o-y increase in downtown Bangkok condominium launches in spite of the general sluggishness of the year’s economic performance. And while Q1 was relatively quiet, Q2 saw a 116% Q-o-Q increase in new condo units, reports CBRE. JLL confirms that there was a healthy demand for newly launched high-end condo projects during Q2 of 2015, and a strong appetite for new luxury high-rise developments in Bangkok.

A crucial point to note in all of this is that the most coveted locations for new projects are those that are easily accessible to mass transit lines. Clearly, no one wants to get stuck in Bangkok’s crippling traffic jams…

LOOKING AHEAD

Appreciation rates between construction and completion.

Things are looking pretty decent for Thailand in 2016. CBRE reports that the nation’s total investments are expected to grow by 8% to 9% next year compared to 2% – 3% on average during the past several years. This is attributed to government initiatives particularly in the high-technology sector, resulting in an economic expansion of 5% next year.  Evidently, Thailand’s economic growth is expected to be better than this year’s amid positive signs of recovery in exports and consumption.

“One of the key economic driving engines next year will be the government’s investment, which will help promote more public investment and increase employment,” said TMB chief executive officer Boontuck Wungcharoen.

This essentially signals a growth in jobs, which correlates strongly to increased housing demand.

For the most part, investors of Bangkok property generally base their purchase decisions on the hope of achieving capital gains in the short term and long term. In most cases, prime condominiums – especially high-end condominiums – in central business areas enjoy a minimum of 20% increase in prices from when they were offered for sale off-plan.

To illustrate, Thailand’s top 5 listed developer AP (Thailand) Co Ltd recorded a resale price increase of 41% from the original price for its Life Ratchada project, while its Rhythm Sukhumvit project saw an price increase of 39% compared to pre-construction.

Also, the dwindling supply and increasing prices of land in prime areas for future development looks set to push prices up in future condominium projects. Ultimately, the outlook is positive for the canny investor.

More Reading:

  1. Case study of Bangkok
  2. Strong demand at high end
  3. Cautiously Optimistic Outlook for Bangkok Property Market
  4. Office vacancy rates at a 20-year low and rents
  5. Bangkok condo market view Q2 2015
  6. Long term resilience seen in Thai property market
  7. Push for investments expected to enable GDP growth of 5% in 2016
  8. Why buy Thailand property and why buy now
  9. Bangkok’s prime condo market prices to hit record high in 2015
  10. Where should Singaporeans buy property in 2015

CSI Properties (Cornerstone International) proudly markets international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: Cornerstone International does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

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