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The Basics of Investing in Thailand Real Estate

As you are thinking of buying a property or making a rental investment in Thailand, we’re certain that you’re asking yourself the following questions:

Is it risky? Do I have to buy? Why Thailand?

The article below gives you an overview of the economy, the infrastructure, and the real estate market in Thailand.

Buy, yes, but for what purpose?

Any investor needs to understand the purpose of their investment.What is your investment goal?When investing in Thailand or elsewhere, the first question to ask is: What is the purpose of my purchase?

  • For living?
  • Is it for rental income?
  • To establish personal assets?
  • Or reduce your tax burden by diversifying foreign currency investments?

Indeed, the choice of the type of property, the exact location, or the number of rooms will be different depending on the answer to this question. Nevertheless, in real estate, it’s customary to say that 3 points are important: location, location, and location!Therefore, it’s essential to identify your real estate investment goals.Here’s some information in the following paragraphs that can help you answer this question.

Thailand in Brief

Located in the heart of Southeast Asia, Thailand enjoys a geographical location suitable for expatriation thanks to its magnificent landscapes, its idyllic living environment, and unique climate. These advantages also make Thailand a very popular destination with over 30 million visitors in 2016particularly fond of its vibrant capital, Bangkok, and the paradise islands of Phuket area.Thailand, however, is not only famous for its landscapes, but also for its quality of life and its cost of living 2 to 3 times lower than in Europe. It’s also highly attractive for its strong international business focus thanks to its geostrategic position in the center of ASEAN (Association of Southeast Asian Nations) and many commercial partnerships favoring exports and imports.

How about the the Thai economy?

Following the Asian economic crisis that shook the Thai economy until 2001, the country has reversed the trend and is now enjoying sustained annual growth rates of more than 3.6% in 2015.The country’s central geographical position within ASEAN is a major asset for Thailand, and thus greatly promotes trade with its neighboring countries. As proof, many multinationals are opening their headquarters in Bangkok in order to spread to Southeast Asia, such as Airbus, Michelin, and Exxon Mobil.In addition to Southeast Asia, Thailand has a privileged relationship with Europe and the United States. Moreover, this power is accompanied by one of the lowest unemployment rates in the world: 0.8% in 2015.What about political stability? It is true that Thailand has faced different political crises, but the country’s economy has shown great resistance. Indeed, despite the crisis of 2014, growth reached 3.6% from 2015, proving its great strength.

Modern infrastructures

This economic development also allows Thailand to benefit from state-of-the-art infrastructure. This is particularly true of the health sector.There are many hospitals such as Samitivej Hospital in Bangkok or Phuket Hospital. The latter is renowned for the quality of care and their ability to speak in English or French. However, be careful to verify the terms of your health coverage abroad beforehand.

Concerning transport, some districts of Bangkok, such as Sukhumvit and the city center, are particularly well served by the Skytrain (BTS) and Subway (MRT). They are modern and allow to move around in the city quickly.

The proximity of a station is therefore important to your real estate decisions if you want to invest in Bangkok (A typical preference for tenants.)

There are also many education-related infrastructures in Thailand. There are currently about 130 international schools in Thailand, two- thirds of which are located near Bangkok. For example, the French International School or St Andrews International School, with over 30 nationalities represented.

As for Phuket, there’s the Jules Verne French school and the British International School, among others.

An affordable real estate market

Despite sustained economic strength, the Thai real estate market remains accessible. Indeed, although purchase prices and rents are constantly and steadily increasing, they are still two times lower than European averages. Moreover, the average price per square meter in 2017 in the center of Bangkok is around 3700 € (140 000 THB) and 1500 € (57 000 THB) in Phuket compared with more than 9400 € in Paris.

It’s, therefore, possible to find new properties that are particularly well serviced:

Many apartments are part of complexes with swimming pools and gyms, among others.

In Bangkok, ambitious projects are emerging. Great examples of this trend include the Siamese 42 and popular complexes such as Emporio Place and Bright Sukhumvit 24. Both located in central districts of Sukhumvit, they can represent real opportunities to invest in Thailand.

Investments are also attractive in cities and seaside islands, such as Phuket. In these cities, the market consists of villas and apartments that often have a private or shared swimming pool in residences with a sea view. New programs with a guaranteed return on investment are very popular and represent a very interesting formula for investors. However, caution is necessary because you’ll need to choose the right program in the right place with a reliable promoter that will ensure the investment’s guarantee.

On the other hand, the risk of a decline in real estate prices is regulated by the control of excess supply in response to the sharp increase in demand from foreign investors around the world. Indeed, Thailand is and will remain a destination of choice thanks to its quality of life but also through its regulation of permitting access to full ownership for foreigners.

Attractive Return on Investment

In the context of a rental investment, the notion of return on investment is logically important. It’s difficult to invest in real estate without having any idea of the potential it can have.

Of course, the return on investment fluctuates according to the location of the

property as well as the property itself. However, investing in Thailand can offer returns on investment well above that observed in Europe. You can expect net yields of 5 to 7% in Bangkokagainst 2 to 3% in Paris in 2016 on either new projects or properties for resale.

More and more foreigners discover Thailand on holidaybefore looking to rent or buy real estate. This transformation from tourist to expatriate status is an increasing trend. The French Embassy is registering a growing number of expatriates from year to year, about + 10% per year. By way of indication, the number of French visitors increased by 265% in 15 years.

According to a study by HSBCin 2013, Thailand is the 1st choice for expatriationdestinations, and The Kingdom of Siam is the 2nd country for retirement.

If you want to know more, check out our other articles on investing in Thailand (Thailand’s New Market, Thailand’s Resale Market…) to prepare your project in the best conditions and make the right decisions!


Photo by Geoff Greenwood on Unsplash
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