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Thailand conjures images in the mind of palm strewn, white sandy beaches with warm blue sea lapping against the shore, hot sunny days, temples, smiling locals, tasty food, bustling Bangkok, wildlife and nature in abundance. Coupled with relatively reasonable cost of living it’s no wonder that the Kingdom saw a record 38.27 million tourists in 2018, up 7.5% from 2017.
Thailand has been raising it’s living standards for the better
Thailand has been raising its living standards for the better. In the past 5 years living expenses has gone up. Although you can still experience true value for money in suburban areas.
The residential sector has gone through a revolution, not only in asset class diversity but also strategic locations and architecture. Branded residences had made their entry, placing Thailand in the spotlight for lifestyle-oriented investments – attracting a wealthy demographic.
Due to this growing infrastructure, Thailand is one of the few countries in APAC where you can easily adapt to your environment without guidance, especially in the Capital where mass transit reaches all corners of the city, as we can see on the metro line image below.
With leading infrastructure developments and center positioning in APAC, the influx of foreign direct investment remains positive.
What makes more investors shift to Thailand?
Overseas markets have changed their property taxations drastically after Chinese inbound investment affected local buyers and housing prices. To prevent local markets from mass speculations and uncontrollable foreign influx, many governments have introduced reforms. These reforms make it less attractive for foreign investors to gain benefits from their investments abroad.
In Thailand the reality is slightly different. Thailand highly depends on direct foreign investment. It still remains one of the preferred investment destinations as it is very tangible for investors. It is well located in Asia Pacific and has direct flights from all major cities in the region.
On the other hand, the property taxation and land department regulations are uniform across the kingdom, making it comfortable for investors to make acquisitions in different provinces.
Price to Rent Ratio as Return on Investment
Although the price to rent ratio has many variables such as under/over valuated properties and valuation discrepancy. This Ratio is a good indicator to show the direct ROI on Thailand Properties compared with other foreign markets.
Underneath graph shows in one eye blink that it will take approximately 19 years to pay off a Thailand Property with the current rental income(yield) status. Thailand’s rental yield, emphasizing on Bangkok 2017-2018 is on average 4.5 – 5%.
The geographical diversity of the Bangkok may affect absorption rates and rental prices.
Thailand is never dull, and every province has its own charm, real estate cycle and pricing structure.
What drives Thailand’s property market?
- In 2011, the world bank announced that Thailand is an upper middle-income country. Wages have gone up and specialized high earning professions are more common among the locals.
- Thailand Property remains affordable if you would compare this to other upper income countries in Asia Pacific.
- More PPP agreements have led to Mega infrastructure improvements that will shape Thailand into a new era. Among them we find the EEC (Eastern Economic Corridor), China’s One Belt One Road, Laem Chabang Port, Digital Park, High Speed rails.
- Not to forget condominiums are freehold for foreign buyers plus the fact that transaction cost for new development are next to nothing.
Interesting cities for foreign buyers
Compared to coastal areas, Bangkok has a consistent stream of visitors all year round, making the real estate market dynamic. Yes, there has been more supply in the past years, and if you take a closer look at this supply you will recognize a pattern of USD$110.000 – USD$175.000 in the 1-bedroom segment. Reason for this 1-bedroom manifesto is the acceptable investment budget for the majority of the local households.
Bangkok has also become a leader in luxury developments on the major avenues of the CBD. Brands such as the Kempinski and Four Seasons are one of the most recognizable in this sector. Paired with all these luxury property developments goes an economical boost in the society, from unwinding the Michelin guide to the rise of luxury vehicles.
Bangkok offers a suitable asset for every investor and budget.
Pattaya has gone through a period of stagnation and did not fully recover yet. Reason was the drop of tourist arrivals from specific countries. Pattaya has leveraged its family orientated image by introducing more waterparks and quality hotel developments.
Although infrastructure improvements such as the new Terminal 21 mall and the beach promenade look fantastic, the residential market is slowly picking its pace. Residential projects with a beach resort style look are no longer the norm, high rise condominium developments are on the rise – changing the landscape of Pattaya indefinitely. One project that attracts much attention is the new Ramada by Wyndham, offering a legally solid buy to let scheme for investors. A trend we will see in many more coastal areas.
Quality tourism with higher spending power has shaped Phuket in a favorable destination for the Movers & Shakers of APAC. Hotel developments are increasing y-o-y with a more focused concession on the diversity in generations.
Phuket is renowned all over the World as a tourism and holiday destination. Here we find quality tourism with higher spending power. No wonder why this area is interesting for foreign buyers. Here they can find world class facilities including, shopping centres, hotels, marinas, beaches, attractions, restaurants and hospitals.
Spa and Health retreats provide holistic and healthy lifestyle packages that are becoming a key part of progressive everyday life. Golf and recreational sports are widely available throughout Phuket, cycling and fitness related activities continue to grow in popularity and are supported by International events.
2019 will be a very exciting year for Phuket – Developers have turned to Hotel branded residences with proper world-renowned hotel management agreements. Stay tuned!