Return of Tourists to Thailand Pushing Up Demand for High-End Condos
The revival of tourism in Thailand after Covid-19 has given the country’s property market a boost, with Bangkok seeing more demand for high-end condominiums.
“We believe tourist (arrivals) will come back to almost 30 million this year, and rental demand is really going up, both in Bangkok and in resort destinations,” said Sunchai Kooakachai, Director-Head of Research & Advisory at Knight Frank, Thailand.
Visitors, who are arriving from countries such as Malaysia, China, Russia, South Korea and India, are also looking to buy properties in the Thai capital.
While demand for “super-prime” condominiums in Bangkok – which cost at least 15 million baht (S$580,400) per unit – has gone up, supply is not increasing as much, said Sunchai.
The city’s central business district and river side locations are popular with buyers. International schools are also driving up demand for super-prime condominiums in places such as Central Lumpini, Sathorn/Silom and Sukhumvit, added Sunchai, who was speaking at the Invest Asia Property Show at the Sands Expo & Convention Centre on July 29.
“If you are focused on condominiums close to international schools, in the last three years, despite Covid, the prices still went up like 5 or 6 per cent,” he said. “If you want to rent out (your unit), the demand is still increasing and supply is still stagnant. That could be an opportunity for people who want to invest in or buy property in Bangkok.”
There has been growing demand for Bangkok condominiums in the rental range of 50,000 to 70,000 baht per month, up to 100,000 baht per month, according to an April article in Thai newspaper The Nation which quoted Mr Sunchai. A one-bedroom unit next to a large mall in Silom, Sathorn or Lumpini could be rented out for50,000 baht a month – up from 35,000 baht during Covid, and back to pre-pandemic rates.
During the talk, Sunchai noted that hotel prices are rising, which could have driven up demand for short-term condominium rentals in the city centre. And with the easing of Covid-19 curbs, Chinese nationals have increasingly been eyeing long-term rentals in Bangkok.
“That’s why when we see an increase in tourists, especially Chinese and Russians, we can (also) see the demand for rental(units) increasing,” he added.
Buyers, Take Note
Before investing in Thai condominiums, foreigners should know the fees involved.
When a person buys a property, there will be a 2 per cent transfer fee (often split between buyer and seller).
When they sell, besides the 2 per cent transfer fee, they also need to pay a withholding tax – and either a stamp duty of 0.5per cent, if they had owned the property for more than five years, or a business tax of 3.3 per cent, if they had owned it for a shorter time than that.
Only 49 per cent of units in each condominium building can be owned by foreigners, Sunchai noted.
But even if the quota for foreign ownership has been met, they could still own a unit via a company that is majority Thai-owned or sign a 30-year lease, he added.
“The last (option) is usufruct (temporary ownership rights), which gives you the right to enjoy (the property) till you pass away,” he said.
Russian and Chinese Wave
Phuket is another popular destination for foreign property investors.
“Thanks to the Russians and the Chinese, the prices of property (in Phuket) have been pushed up… It’s quite the same situation as Bangkok because land prices are going up and there is not much land on the Andaman side for development of new projects,” Sunchai said.
He identified Bang Tao Beach, Cherng Talay, Patong Beach, Nai Harn Beach and Rawai Beach as some of the popular areas on the island for foreign investors.
The property event at the Sands Expo &Convention Centre attracted investors from Singapore who were keen to learn more about the latest trends.
One of them was Kelvin Foo, 27, who is considering buying property in “prime areas” of neighbouring countries, such as Bangkok’s Thonglor district and Kuala Lumpur in Malaysia.
These locations give him “a sense of security, because they are nearby”, explained Foo, who runs a recruitment company and attended the event with his business partner.
“We also considered Vietnam because it is politically stable. But Vietnam is too far from us and we think the price is overvalued for now,” he added.
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