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Mixed forecasts for property in Bangkok

Friday 31st March 2017

Written by Roy Weatherby, The Overseas Investor

The latest round of forecasts for the Bangkok property market is something of a mixed bag. While predictions are broadly positive and highlight strong fundamentals, there are also some potential pitfalls ahead for the Thai capital.
The resale market
It is very much the resale market that is at the core of Bangkok property right now. Indeed, it is fair to say that resale properties represent most of the business of most of the city’s agents. For investors, resale properties are often more attractive than new builds because they are frequently sold with tenant agreements already in place.
In the immediate future, the Bangkok resale market is likely to be active as ever, with plentiful supply of available units. Location is key, however; in some areas this will mean that a wide choice of properties is coming to market but they are nonetheless being snapped up quickly, while elsewhere there will simply be an excess of supply.
New properties
While the resale market is the star of the Bangkok property scene, new builds have their place. Developers are offering attractive deals to compete with resale properties when it comes to grabbing the attention of property investors. Once again, however, location is key. In many parts of the city, resale properties continue to offer lower prices in plentiful supply, complete with potential benefits such as existing tenant agreements. Indeed, this has the potential to choke sales on new developments and ultimate bring down entire projects, making off-plan purchasing a risky endeavour at best.
New builds come into their own in the city’s more emergent, up-and-coming districts where new builds abound. Here, returns on new builds are relatively stable, prices are attractive, and supply is plentiful thanks to the frenetic pace of development which almost defines an emergent city district.
Potential pitfalls
As long as investors choose their properties with proper care and diligence, then, there are good deals and strong, reliable returns obtainable on both established and new-build properties in Bangkok. However, there are also some possible obstacles in store for the city. Not least of these is the implementation and enforcement of two new tax acts. The House and Land Tax Acts will apply to owners of villas and condominiums throughout Thailand in cases where that property has been used by anybody but the legal owner. This applies even if it was used for a single day, and even if no rent was paid to the owner for its use and the enforcement of the acts is likely to grow more rigorous with time.
China’s tightening of laws governing the flow of Chinese money overseas also has the opportunity to impact negatively on the Thai market in general and Bangkok in particular. Last year’s various efforts in this direction were inconsistent in just how successful they managed to be, but with China’s economy slowing things are likely to get a lot stricter. As Chinese investors are a key group of buyers for Thai property, accounting for as much as 40% of medium-value condominiums in some areas, this certainly has the potential to bite Bangkok.
For more information or to browse a range of property investments in Thailand, please contact Hopwood House.

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