Property in Thailand: A Mixed Bag
By Paul Gambles, MBMG Group
Looking at the Bank of Thailand’s house-price index shows an unchecked 64% rise in the last ten years. But that doesn’t go anywhere near to telling the whole story.
Prices vary massively between a provincial town and Bangkok or one of the major resorts. They also depend heavily on the quality and location of the project. For example, older condominiums come under the previous Act and therefore were built to lower standards, often using cheap materials.
There are signs that prices are falling in Bangkok, but it depends on each project. Prices tend to be falling faster now than around three years ago. Most projects no longer sell out during the presales period, which can hurt the speculator, but this is good news as it discourages risky buying.
Part of the reason for this is the degree of oversupply in some areas of the capital. However, projects tend to sell out eventually, largely due to the low interest rates at which the banks lend money.
To slow down debt, the Bank of Thailand has restricted lending to no more than THB 10 million for property and THB 1 million for the interior. This will affect some people, but interest rates are still low.
In Thailand, it’s possible to have a spread over the loan for the initial period of the loan, as banks usually offer promotions over the first two or three years. This essentially gives the buyer more time to sell or pay back the loan. Consequently, there are a lot of properties sold, but not many people living in them.
Curiously, we have seen some properties at exceptionally high prices sell out; yet others at more reasonable prices have not. Also, lowincome housing is oversupplied in most areas outside central Bangkok.
The market therefore appears to rely more on foreigners to buy in the most expensive brackets, but most quotas for foreign buyers aren’t full. The rental market in central Bangkok appears to be stronger than in the last couple of years but yields remain low at just 3-4%.
Paul GamblesMBMG Group, Bangkok, Thailand
T: +66 2 665 2536
Paul Gambles is co-founder and managing partner. He is licensed by the Thai SEC as both a Securities Fundamental Investment Analyst and an Investment Planner. Paul is also well-known as an expert commentator, appearing regularly on Bloomberg TV, CNBC and Channel News Asia. He also writes the weekly newsletter MBMG Markets Flash, regular Updates and articles.
MBMG Group was founded in Asia in 1996 and has since grown steadily. It offers services ranging from investment advisory, corporate advisory, tax advisory, family office, accounting and audit, legal, insurance, estate planning and property solutions.
Published: Real Estate, No. 09, Spring 2019 l Photo: tuayai - stock.adobe.com