Hello. I have been working as an actual property agent in Bangkok since 2006. In that point I’ve seen some adjustments, however surprisingly little or no has modified. Let me clarify.
Condo Rental Costs Bangkok 2008 – 2018
Rental costs of most condominium buildings have elevated very marginally over the previous 10 years. Whereas a spacious 3 bed room condominium in Sukhumvit space would have price 70,000 Baht 10 years in the past, it could price you 85,000 Baht as we speak. That is solely a 20% enhance over 10 years, truly far lower than inflation, and in some ways an condominium is cheaper now than 10 years in the past.
Why? It is troublesome to say however I’d guess that ongoing political issues, 2 coups, and a fairly stagnant financial system barely kicking over at round 3% progress in GDP every year are the explanations. This stage of progress could also be acceptable for a world main developed nation, however for Thailand that (let’s face it) nonetheless has some option to go by way of improvement, it is not excellent.
The condominium rental market in Bangkok is generally ruled by expats. Thai folks do not lease at these costs, both they do not earn sufficient, or are smart sufficient to purchase a property within the suburbs, or are a part of the immensely rich elite and already personal a number of blocks in central Bangkok. Because the variety of expats has remained pretty fixed, so have rental costs.
Newly constructed condominium buildings have seen an increase in rental costs, and there’ll at all times be a small proportion of people that have adequate finances and solely need to reside someplace very new, one thing is especially true of Japanese renters, however the brand new buildings will change into previous and as soon as they’ve been constructed and a rental worth has been established, you’ll discover that the value will keep comparatively stagnant from then on.
That is truly the identical with condominiums on the market. As soon as a constructing has completed building, a gross sales worth and rental worth is established, and it’ll stay stagnant at this stage for years to come back.
However costs have been growing in Bangkok, everybody is aware of that!! So am I incorrect?
Condominium Gross sales Costs Bangkok 2008 – 2018
I do not assume I am incorrect. There are some condominium buildings which have skilled an excellent stage of capital appreciation lately, however “on common” they have not.
Sure, costs have been growing considerably in Bangkok, and that is one thing that each one builders will fortunately promote to you when promoting you their model new venture. They are going to present you graphs with an upward pattern in costs, and present you that costs are growing at the very least 5-10% 12 months on 12 months.
Costs of brand name new buildings have been growing a 5-10% 12 months on 12 months, however not accomplished buildings.
That is principally all the way down to will increase in land costs. As land costs enhance (and to some extent building prices) so have the price of new buildings. So new buildings get ever costlier, however are accomplished buildings following swimsuit?
No. And because of this I am not incorrect. A constructing that price 150,000 Baht/sq.m. 5 years in the past, could now solely be 160,000 Baht sq.m. On this instance round 1.5% compound progress. This constructing was model new 5 years in the past, and a model new constructing as we speak nonetheless underneath building may cost you 200,000 Baht/sq.m. which is 33% greater than the brand new constructing was 5 years in the past, therefore the 5%++ compound progress.
However the truth stays, the constructing that YOU bought 5 years in the past could have elevated just one.5% compound per 12 months.
That is the continued pattern with Bangkok property. New buildings consistently set new benchmarks in costs, after which stay the identical. With even newer buildings including a layer on prime, setting new benchmarks, after which remaining on the similar stage. Even newer buildings nonetheless, simply preserve including one other layer on prime.
This is the reason you can find such enormous worth discrepancy between buildings, even when they’re situated proper subsequent door to one another. An instance can be Lumpini 24, a brand new condominium situated on Sukhumvit Soi 24, the place costs will fetch round 250,000 Baht/sq.m. So, a 60 sq.m., tiny little 2 bed room unit will price round 15,000,000 Baht.
Instantly subsequent door is an older condominium known as President Park, the place costs have remained stagnant at round 60,000 Baht/sq.m. So, a really spacious 3 bed room unit of 260 sq.m. will price you round 15,000,000 Baht.
4 occasions larger, situated instantly subsequent door, however the identical worth! So the previous adage “Location, location, location” would not apply right here. It’s ONLY based mostly on the age of the constructing.
Right here is an instance of a more moderen constructing on the market, 275sq.m. asking 80,000,000 Baht: http://www.property-bangkok.com/viewproperty.asp?id=587
Right here is an instance of an older constructing on the market in an identical location, 366sq.m. asking 21,000,000 Baht: http://www.bangkokcondo.org/viewproperty.asp?id=614
Sure, the brand new condominium is far nicer, higher design with newer foyer and glowing services. However is the variation in worth absolutely justified. I imply, 4 occasions the value!
Baring in thoughts that the inside of the brand new condominium will age and wish changing, and should you purchased within the older constructing you possibly can renovated the inside to have all of it model new.
In any occasion, whether or not you purchase within the new condominium or older constructing is neither right here nor there, the principle difficulty being raised on this article is that costs of recent initiatives could have elevated properly, however after you have invested in your condominium unit, it’s possible you’ll not realise the identical stage of progress that you just have been instructed by the developer.
The one ones actually seeing enormous capital progress, are the land homeowners. And these are principally already very rich Thai folks, as non-Thai’s can’t personal land. It would not assist the vast majority of non-wealthy Thai individuals who nonetheless stay financially strapped.
Workplace rental costs have additionally remained fairly static. Over the previous 10 years workplace rental costs have elevated marginally, much like the condominium buildings. Nevertheless, as most traders (each Thai and Overseas) appear fixated on condominium buildings, the value of workplace house on the market has additionally remained fairly static, and arguably workplace items on the market present the most suitable choice for rental returns, provided that workplace leases are usually minimal 3 years, and also you needn’t renovate the workplace house such as you would with a condominium, with the previous requiring a whitewash lick of paint, the latter new furnishings, new loos, new kitchen and so forth.
This isn’t to say that it’s a dangerous thought to spend money on Bangkok actual property. However you have to take into account workplace house and business properties in addition to residential, and you have to very rigorously take into account the constructing, as I beforehand talked about, some condominium buildings have seen good progress over the previous 10 years, whereas most have not.
That you must have a very good eye. Better of luck!