China Solutions

Why It’s Time to Look for Real Estate Buys Beyond The Heart of Bangkok

March 24, 2024

Bustling night markets, vibrant shopping centres and food galore – the heart of Bangkok is where the action’s at.

Or so it once seemed. With new infrastructural projects coming up, including the soon-to-be-completed Yellow, Orange and Pink Metropolitan Rapid Transit (MRT) lines, potential investors will gain access to a wider pool of real estate opportunities beyond the usual prime locations.

“There’s a lot more connectivity in Bangkok now, and a lot of projects for you to choose from,” said Mr. Winson Chan, Marketing Director of property management agency88PROPERTY at PropertyGuru’s Southeast Asia Property Investment Show (SEAPIS) on March 26, 2023.

“For example, the Kaset Nawamin-Ladprao area is quite underpriced now. Last time, it used to be extremely inconvenient. Now, it is at the intersection of two upcoming MRT lines.”

Once overlooked, Bangkok’s suburbs now present favourable investment opportunities because of growing connectivity and sharper city planning by the authorities.

Property prices in the prime areas of the Thai capital have also grown prohibitive, shared Mr. Justin Sirias Chan, Managing Director of Propnamics Co. Ltd.

“Prices are relatively high in the town area, or the three ‘S’s: Sukhumvit, Silom and Sathorn. The trend of the property market is slowly moving out of these prime areas, for both investors and developers,” he added in a fireside chat moderated by Mr. Winston Lee, Director of Special Projects at PropertyGuru.

Every Location in Bangkok is a Good Location

Such a move is fuelled by the growing allure of other key Bangkok locations. Many have good potential, shared the speakers.

“It depends on how confident you are and how much cash flow you are willing to invest,” Mr. Justin Sirias Chan explained.

“Every location has its own category of demands, and every property you see in the market has its own group of customers, tenants and buyers.”

For instance, Mr. Winson Chan pointed out, investors can make their decisions based on the tenant pool they want to cater to.

More “prestigious”, high-end properties would likely appeal to expats who can afford them, but not so much the local working-class Thais who rent properties near their places of employment only during the weekdays.

He added that the city centre is also running out of land, prompting the government to rejuvenate old neighbourhoods and build new ones outside of the city centre.

“These look more modern than the ones in town – there’s proper city planning,” he said. “You can go in at a much cheaper price and reap the rewards later.”

Patience is a Virtue

Understandably, people want the assurance that they will get high returns on their investments.

It was a sentiment that Mr. Bernard Lau, a local freelancer who attended the event held at the Sands Expo and Convention Centre, shared. “If you are knowledgeable and keen on investing, go for it. If you’re not sure, create your own ground rules first and be confident going in. Of course, the important thing is to get good returns,” he said.

But what is the key to doing so? Both speakers unanimously agreed that it boils down to one fundamental trait: patience.

Unlike in Singapore, where housing demand and supply are largely regulated by the government, Thailand is a free market that is much more susceptible to market forces. Moreover, Thailand charges ahigh capital gains tax within the first five years of owning a property.

“As an investor, you need to have the mindset that if you go in, you cannot expect to get high returns within one to two years,” said Mr. Winson Chan. In general, investors should hold on to their property investments for a minimum of five years, ideally more.

And while many Singaporeans dream of owning a future retirement home in Bangkok, he proposed an alternative way of looking at the situation.

“The timeline could be very long, a 10 to 20 years later kind of thing,” he pointed out. “You should look at investment-grade opportunities and the rental yields you can get in the meantime, rather than whether this home is suitable for you to retire to in the future.”

Ultimately, it is unhelpful to apply Singapore or Malaysia’s standards to the Thai property market, where capital growth is generally slower.

“Thailand is not the market for impatient investors,” Mr. Justin Sirias Chan maintained.


Note: Article content was written based on the speaker’s insights from Southeast Asia Property Investment Show (SEAPIS) event which was held on 25-26 March 2023.

 

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