Property is a great thing to invest in, when one has the necessary funds. While commodities and day trading can turn in miniscule profits, at the end of the day, you can’t get much more tangibility than through a home. However, one thing that keeps people from investing in houses is that, aside from being expensive, the risks of a drastic change are very severe.
Property markets are quite fickle, in that what might have been a great investment in one year will turn out to be subpar after a few years. Investing carries risks, and predictions aren’t always right. But despite that, one thing that has always help up – even against a severe economic downturn, martial law and more – is that condominiums in Thailand are a relatively profitable market. While the growth of the market has slowed quite a bit, it has picked up in other factors.
Then there’s the development of government-sponsored economic zones slated for completion over the next few years along border cities of the country and its neighbours. That means more growth among towns and cities outside of Bangkok’s massive real estate body, and more opportunities for development companies to build higher income housing away from the country’s capital.
Townhouses are also an excellent place to buy into, as they can be rented out for passive income. While selling a townhouse is not easy, it’s doable – and as the markets continue to improve with time, and the country recovers from its economic woes, Thailand is slated to see a stronger market for residences in places outside of the country’s tourist zones.
In short, whichever way you turn, you’re bound to find some piece of land here in Thailand that can increase your equity, provided that you’re playing your cards right. But the question is – how do you figure out which piece of land is most profitable? And how do you play your cards right? Well, that’s what we’re here for today, to help you figure out how best to spend your money in Thailand’s property market.
Condominiums are the Real Deal
Condos are the only choice of investment that foreigners can make. These are buildings owned by development companies, and sold to owners of individual units. Every owner owns a percentage share of the building, and thus a percentage share of the cost of building maintenance and upkeep. Furthermore, being a joint ownership venture, they come with their own set of contractual rules that every owner and tenant has to abide by.
A percentage of units can be rented out – only a percentage, because the risk of damage and problems among tenants is higher than among owners, who share a more substantial financial risk. Furthermore, only 40% of units in a single building can belong to a foreigner. That may sound like a substantial amount, but you’ll be surprised as to amount of competition that foreigners may face between each other in the market.
According to Bruce Bickerstaff, the author of Your Investment Guide to Thailand, numbers in 2013 estimate that one in sixteen people in Thailand’s population are foreigners – in a country of 67+ million, that amounts to many foreigners.
But it’s not just foreigners who invest in these buildings. If you’ve been following Thailand property news, or if you’ve been looking through the prices on websites like DDProperty, then you’d know that condos have been a strong place to invest in, even if recent months have slowed their growth.
That hasn’t stopped the resale markets, however. Due to their lower cost, second hand condo units are also becoming an attractive way for people to invest in property. While some consider the risk too high due to the problems surrounding higher maintenance costs and lower safety in older buildings, reputable developers can create projects that last much longer than most others, and even increase in value.
Another factor is the building of more mass transit systems in Bangkok specifically. Mass transit means more opportunities for work, and that usually means more work, and larger, competitive and stronger property markets.
Housing Could Take Over
Developers who saw success in the markets are now potentially switching over to developing housing, as condos drop off slightly and city outskirt luxury housing becomes the home of choice for economically well-off Thais. Even within the city area, houses might compete in places of high transit.
From an investment point of view, a house is a very good use of money. Especially with large lots, allowing for – within city zoning codes – modifications and further expansion of a house. While condominiums require regular maintenance fees, homeowners have to deal with property taxes and other costs of maintenance. They do, however, have a larger freedom to do with their home as they please, another point for housing. Development companies are hesitant to start new projects, according to Colliers, because of said economic troubles – so housing is the attractive alternative.
The final call, however, depends on your location and the opportunities you have as per your current economic standing. In some locations, condos would be much more expensive than a house and lot, while the opposite is true elsewhere. Neighborhoods make most of the value of a home, because while you can modify a property, you’d be hard-pressed to come up with ways to change a neighborhood on your own.
The same can be said for condo projects themselves – it’s better to buy the cheapest unit it a luxury building than pay the same price for a much nicer unit in a building with questionable construction and a subpar location. Amenities aren’t everything, after all – you still need to get out and about.
Do your research. Contact a lawyer or agent, someone who knows your location like the back of their hand, and work with them to find the best bang for your buck. And finally, make sure to have a lawyer on your side so you can safely put your money into a whole new location without having to worry about Thailand’s laws and regulations tripping you up in places you might’ve not seen coming.