With weak equity markets and low interest rates persisting this year, investors are hard pressed to seek higher yields to build their wealth for retirement. One way is to obtain an equity-term-loan to cash out the equity of their Singapore homes. They can then use this cash to buy a Bangkok property which yields a higher return and build their nest egg.
One potential bright spot is investing in property overseas, such as Bangkok.
With the Thai baht weakening, the launch of the Asean Economic Community (AEC) and the expansion of the public transport systems, this could be a good time to enter the market.
SET-listed property developer Sansiri, which is well known among foreigners, reported Bt1.5 billion in sales to foreigners in the first five months of 2016, compared with Bt800million in the same period last year, according to an article by Bangkok Post.
Interest from Asian investors, in particular China, is strong partly due to property cooling measures in more developed cities such as Singapore and Hong Kong, which have led investors to look elsewhere.
Foreigners can own 100% of the private condominium unit under their own name provided the building has at least 51% of the units held by the Thais.
However, foreigners can’t own Thai land. This means landed property is out of bounds unless you go about it in a roundabout way such as setting up a local company.
Most foreign investors’ interest lie in high-end private apartments in the downtown district, where prices have held up. The upcoming implementation of the land and buildings tax is likely to have minimal impact on investment in condos, as the tax rate remains lower than the profit generated from rental yields and the appreciation of property value, which together average 10% a year, according to the Bangkok Post, which cited property consultant Plus Property Co.
The high-end market is drawing developers to continue to launch new bangkok projects. MAI listed Chewathai, a unit of Singapore’s TEE Land, which has mass market and mid-tier condo projects, is also moving into the luxury segment.
The capital outlay is rather affordable. For the price a HDB flat, you can get a one or two-bedroom apartment located near a metro station in the prime district in Bangkok
Bangkok also enjoys relative political and economic stability, having recovered from the political unrest in 2014. Most notably, throughout Thai political unrest, none have been known to target foreigners.
While the economy has no doubt been affected by the global slowdown, the high-end condominium market has been relatively healthy due to positive factors underlying Bangkok’s mid to long-term prospects.
Bangkok is expected to benefit from the launch of the AEC over time as the city grows to become a strategic location for companies who wish to establish themselves in the region.
The AEC has also led to investments in infrastructure development, which is positive for Bangkok. Work has already begun on the Pan-Asia Railway Network, which will link China with mainland Southeast Asia via railway lines. All three routes – Central Route, Western Route and Eastern Route, will start at Kunming run through Bangkok and end at Singapore.
Even within Thailand, it is building mass-transit trains across the country to improve connectivity.
This is expected to boost property demand in Bangkok, which has already experienced significant increases in property prices in the last five years. The average selling price for a condo in Bangkok rose 7.3% per year during the past five years and 5.2% during the past decade according to The Bangkok Post, which cited a study by Plus Property Co. 1
These developments could explain a resurgence in interest in Bangkok properties.
Some things to consider before purchasing a property would be the credibility of the developer, condo maintenance fees, location and exit strategy.
– By Angeline C | August 21, 2016