Property in Thailand: a sound place to invest?
By Paul Gambles, MBMG Group
With its year-round summer climate, friendly people and a relatively low cost of living, Thailand has become a soughtafter place to live. Despite increased supply, average condominium prices have gone up by over 50 per cent since 2009.1 Yet, at an average of around USD 3,500 per m2 (about EUR 3,200) for a city-centre apartment, Bangkok still represents relatively good value (see chart).2
Rental prices are also up: annual yields for Bangkok apartments range from 4.9 per cent to 8.5 per cent,3 with the smaller units bringing the greater returns.
Foreigners are currently finding Thai property to be cheaper, as the Baht has lost around 7 per cent of its value against the U.S. dollar, euro and Swiss franc since March this year. However a prolonged weak Baht may eventually cause greater private debt and a property bubble.
That said, since the 1997 Asian financial crisis, Thailand has become a well-regulated, stable place to invest,4 especially in terms of inflation stability, strength of investor protection and macroeconomic environment.5
Calculating the overall cost of buying property can be complicated: stamp duty and specific business tax are based on either the assessed or declared value; whichever is higher. Added to that, the buyer and seller each pay for their own lawyer to handle the transaction.
Landlords pay an annual property tax of 12.5 per cent of the assessed annual rental value. Money made from rent is subject to a 5 per cent withholding tax, which can be credited to the actual income tax due. On sale, any gains will be taxed at income tax rates.
Thailand therefore represents overall good value for a place in the sun… for now!
1 Bank of Thailand statistics
2 Figures from Numbeo.com
4 Recovery from the Asian Crisis and the Role of the IMF, IMF 2000
5 World Economic Forum’s 2014-2015 Global Competitiveness Report
Paul Gambles, Managing Partner
MBMG Group, Bangkok, Thailand
T: +66 2 665 2534 9
Paul Gambles is Co-founder and Managing Partner of the MBMG Group and Director of MBMG Investment
Advisory. He has completed CFA Level 1 and he is licenced by the SEC as both a Securities Fundamental Investment Analyst and an Investment Planner. He is a member of Advisory Board of IDEA Economics.
MBMG Group was established in 1996 as a diversified professional services practice and employs almost 50 specialists in advisory services, accounting and audit services, insurance services, legal services, property solutions and estate planning for clients in Thailand, Singapore and throughout Asia.
published: October 2015