Invest In Thailand Property
A Comprehensive Guide to Property Investment Opportunities in Thailand- Widen Your Scope
Located in the mainland of Southeast Asia, Thailand is strategically located with easier access to almost every part of the region. Its rich in culture and history that dates back to centuries, Thailand is truly a jewel in the east. Thailand has one of the fastest growing and biggest economies in Asia especially in the real estate industry that is still untapped. In this article, we are going to discuss in detail about various aspects of the Thai’s economy and investment opportunities for Singaporeans who are interested in investing overseas
Gross Domestic Product
Thailand is one of the most vibrant economies in Asia with a population of 69,230,459; its economy is export-dependent accounting for almost 2/3 of its GDP. According to a recent IMF report in 2017, Thailand has a GDP of 15.450 trillion baht or $455 billion making it the 8th largest economy in Asia.
Both the Industrial and service sector accounts for the largest share of Thai’s GDP translating to almost 39.2% of GDP. Its agricultural sector accounts for 8.4%, communication, trade, and logistics accounts for 13.4% and 9.8% respectively while mining and constructions account for 24.9% of the GDP. The remaining service sectors such as financial, education, and hotel accounts for 24.9% of the GDP.
Bangkok Economic growth
The country has a freedom score of 67.1 making Thai’s economy the 53rd freest in the 2018 index. In 2018 Thai’s economy is expected to grow 4.1% in 2018 one of the fastest percentage growth rate since 2012. Its economic recovery is really broadening as a result of the improved growth of the export sector, increased demand, and utilization of capital goods, and government’s policy which has boosted the stability of the business sector.
Enhancing the free-enterprise system and favorable investment policy the government has set up a regulatory framework that is transparent and efficient boosting the integration of Thai’s economy to the global market.
Procedures of investing in the country have been streamlined attracting foreign investors to various fields boosting the country’s overall growth due to trade freedom in the Kingdom. However, constant political stability, weak judicial systems, and corruption continue to undermine economic climate which at times result to economic regression. The country is close to attaining high-income status by incorporating technology and innovation increasing efficiency and effectiveness of the manufacturing sectors stimulating the country’s growth rate as outlined in their the 20-year National Strategy, research, and development.
KEY THAILAND INDUSTRIAL SECTOR
Tourism is one of the major drivers of Thai’s economy with its beautiful weather, sandy tropical beaches and glittering temples making the kingdom one of the most sought holiday spots. Thailand tourism provides 313 million jobs translating to 9.9 percent% of total employment
This sector continues to generate huge revenue especially business travel which accounted for 23.4% of the total tourism contribution to the GDP valued at $1.1 trillion. Business travel is the perfect opportunity for Singaporeans to visit the country and have first-hand information on various sectors they would like to invest their money in.
Travel and tourism have indirectly impacted the GDP and other sectors of the economy
- Domestic buying of goods and services by sectors dealing directly with tourists, for example, fuel and catering services by airlines, IT services by travel agents, purchases of food and cleaning services by hotels
- Government investment to boost Travel and Tourism especially infrastructural development improving the lives of its citizens
- Travel & Tourism investment spending – a vital factor of both current and future activity that includes investment activity like the purchase of new aircraft and construction of new hotels.
Reasons to Invest in Thailand
Thailand is strategically located at the heart of Asia, its close proximity to major players like India and China and ASEAN members providing investors with beneficial and convenient opportunities.
The Thai government is diversifying its economy moving away from agriculture as a traditional source of livelihood. The governments have set in place policy framework that makes it easier for investors to set and run their business through the board of investments which offer a wide range of tax incentive schemes to potential investors.
Over recent years there have been heavy investments in the Infrastructural sector with a skilled workforce, improved transport, and IT network, modern communication facilities create a conducive business environment and living conditions.
Investment and FDI policies
Foreign direct investment is a key factor in Thai’s economic development, investing in skill development, innovation and technology receive full backing and support from the government. Being a member of ASEAN group there is zero importation duty promoting free and fair trade
Thailand is ranked highly in the world freest economy index; the government adheres to international laws such as the Patent Cooperation Treaty that protects foreign businesses registered in the country.
Thailand real-estate sector
Thailand’s real estate industry is continuing to weaken despite the resilient economy; prices are increasing at a much slower rate since the financial crisis in 2008 due to political instability which has played a major role minimal price increase.
In 2017 the land price index rose by 1.59% a stark decrease from the previous year which increased by 7.9%. Between 2008-2018 Bangkok condo prices have risen by 29.1% which is a bigger improvement due to increased demand for both commercial and residential properties.
There is a slight contrast between the Thai economy and property prices because on oversupply, however, due to ongoing upgrade of transportation infrastructures such as Light Green Line Extension and newly built MRT stations rent and property prices are set to increase due to projects close proximity to transportation routes significantly.
For supply, projects slated for development is set to increase as big-name developers have entered the market with the vision of building luxurious and modern condominiums. On-demand is expected to increase as a result of domestic buyers and expatriates steadily. Another factor that has resulted in a rise in demand is the entry of foreigners especially from China looking to preserve their wealth.
Thailand Market overview
The condominium market in Bangkok exceeded expectations in 2017 with an overall uptake rate of 2H rising by 76.5%. The average selling prices have also increased. In the same year, the total number of units launched was 32,258 units setting the record of the highest supply in 8 quarters.
In Bangkok, the accumulated condominium stock rose to 538,920 units marking a rise of 6.4% HOH. For pricing, the market price in the CBD reduced by 5.2% HOH as a result of increased demand in other areas. The average price for newly developed projects will be THB 154,068 per square meter a drop of 1.1%
In 2018, domestic developers have partnered with as a result of expansion demands and increased need to incorporate modern technology in property investment development.
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The number of new development rose by 19% to 62751 units. For 2H 2017 supply rose by 5% to 32,258 marking an increase which was 30,789 units for 2H 2016. There was positive growth in the CBD as more condominium was launched in the second half of 2017.
In the same year 15 luxury condominium projects we launched comprising of 4,777 units in total an increase 22.8% from 1,091 units in 2H 2016 marking consumer taste increasing for finer and modern designs.
Bangkok condominium market had annual growth sale in multiple quarters due to increased buying activity. In 2017 the average take-up rate rose by 75.8%, for new projects within the CBD the take-up rate increased by 77.4%, as a result for increased demand for units with a modern and superior specification. The take-up rates for projects in remote and fringe locations was 72.5%
This demand was also illustrated as some developers reported that they were able to sell 80% of their units on the launch day. Property demand for units with high-end specifications, convenient location, and proximity to amenities remain a top priority for most people. Some of the areas that have witnessed increased interest include Onnut-Bearing, Ratchadapisek, Ladprao.
The average Bangkok property prices for all types of condominiums launched stood at THB 153,220 per square meter marking an increase of 5.9% YOY. In the CBD the average selling price THB 241,585 per square meter an increase of 5.6% from 2016.
For new developments in the CBD, prices have dipped slightly by 5.24% as a result of the shift in property demand from prime areas to other regions. As a result of increased property prices, pricing for 2H 2017 property in fringe locations is THB 131,906 per square meter an increase of 0.6%. For condominiums prices jumped to THB 83,623 per square meter and increased from THB 74,591 in 2016. Prices in these areas as a result of newly built transportation routes to and from the city providing easier access to the residential property.
Also check: Buying your Second Property in Singapore
Important factors to consider before investing in the Thailand property market
Buying and selling off condominiums
A lot of units are usually sold by the developer before completion of the project. This allows buyers to enjoy huge discounts allowing the developer to get access to loans pointing out to the selling-out of their projects.
After the project is completed, you can sell or transfer your unit. For home buyers to reserve a unit, you’ll sign a contract and be required to pay a down payment of 10% and another 10% over the course of a few years gradually. Installments are payable monthly until you finish your repayment schedule.
Acquiring loans for foreigners
When it comes to taking loans for foreigners, financial institutions categorize them into two groups: Those working and have an income and those who are not working.
Criteria for foreigners with income
- You must be registered as a Thai resident
- Have evidence of work in Thailand
- Adequate income to finance the loan
- Information about the condominium to be purchased
- The applicant’s loan tenure and age should not exceed 60 years, and also you are required to pass a credit check
Criteria for foreigners without an income
For foreigners without an income, requirements for getting loans have different guidelines and vary from banks to banks
It ranges between 6-8% which is quite high as it can take up a huge chunk of your rental income. For investors looking for property investment with high rental income getting loans from local banks is not the best option.
Property taxes in Thailand
Management fee cost depends on the buildings density, size, and standard. It costs about 500 baht per square meter each year. During the transfer of property, there is a 2% fee that is based according to the governments appraised value, on most occasions half of the fee is paid by both the buyer and seller.
There is also a 0.5% stamp duty payable when transferring property; it’s usually paid by the seller. If a property is sold within 5 years after being acquired a Specific Business Tax of 3.3% is payable, when the Specific Business Tax is paid the law does not require you to pay the stamp duty.
For those investors who are looking to rent out their property, rental tax incomes are extremely low not exceeding 5%.
Also read: Property Taxes in Singapore
Best Properties to invest in
Here are some of the hottest Bangkok property for sale
Life Asoke Hype
The project development is located at the heart of the Grand Rama 9 CBD. It has close proximity to major transportation routes and expressways ways. The project has a stunning and elegant design with world-class facilities that represent the modern Thai lifestyle.
The project is a 1 block building with 40 floors and a total of 1253 units, is slated to be completed in 2020.
Check my review about: Margaret Ville Review
Life Laprao Valley
The high-rise condominium will have 44 floors with total units of 1,141. The units will be a different mix of studio apartments to 1-2 bedrooms apartment Bangkok. The project is situated in Phaholyothin Road, Chom Phon, Chatuchak, Chatuchak, Bangkok, providing easier access to bus stops and MRT stations.
The pricing for each unit will be THB 3,490,000 – THB 3,490,000 and the project will be completed in 2021.
Review: Parc Esta Review
Ideo Mobi Sukhumvit Eastpoint
The project is located along Sukhumvit road; the Bangkok condominium development has a 2 tower comprising of 32 storeys 1162 residential units and 3 ground floors. The unit is close to major expressways and MRT station making movements within the city easier.
Its close proximity to various landmarks and leisure parks provide a serene and scenic environment to the future resident. This property is one of the most sought-after Bangkok property investment for foreigners.
Thai property market is slowly picking up pace closing the gap with other cities in the world. Government backing to foreign investments has stimulated the growth of the real estate sector coupled with favorable policy framework it has made the ease of doing business in Thailand become simple and less bureaucratic. Thailand has a lot of untapped investment opportunities that you cannot afford to miss out on.