- Language constraints. Most promotional materials and all legal documents are usually prepared in Thai language.
- Market knowledge. The Thai and especially Bangkok property market are highly segmented - investors must educate themselves on basics such as where to invest, market prices and who the reliable developers are.
It is best to consult a reputable lawyer who can advise you regarding options such as Retirement Visa, Work Visa or the Thailand Elite Card.
Top 5 investment destinations in Thailand are:
- Chiang Mai
- Hua Hin
- Condos (up to 49% of units in an approved condominium project can be purchased by foreigners);
- Leasehold land (up to 30 years per period, subject to max 3 periods, or cumulative total of 90 years); and
- Building but not the land on which the building is built.
As options 2 and 3 are less liquid, it is best to consider investing in condominiums.
Bangkok's condominium market is highly segmented. Prices depend on location (distance to city center and distance to train station), developer and quality of fittings and amenities.
As a minimum, one should expect to pay at least Thai Baht 2,500,000 for a one bedroom (30 sq. meters) apartment very close to train stations on Bangkok's outskirts, such as in Wutthakat or Bang Wa (baht 90-100,000 per sq. meter).
Within the city, higher quality condos in a (mid market) hipster area such as Aree will cost around baht 160,000 per sq. meter.
Higher end condos in areas such as Asoke and Thonglor will cost in excess of baht 200,000 per sq. meter.
Super luxe condos in Ratchadamri, Langsuan and Sathorn are now fetching prices in excess of baht 300,000 per sq. meter.
1 sq. meter = 10.7 sq. feet.
US$1.00 = approximately Baht 36
It is best to invest in condominiums that are within walking distance to BTS stations, principally along the Sukhumvit and Silom lines.
Condos in most areas near BTS stations such as Aree, Ratchathewi, Thonglor, Wongwian Yai have appreciated considerably over the past several years.
Many investors are now looking to invest in more affordable areas on the outskirts, such as Wutthakat or Bang Wa BTS stations or even further afield, near future stations on extensions to the Sukhumvit and Silom lines.
Gross rental yields average between 5-10%. Bangkok condos appreciate on average between 7-10% per year. However, it is all about location, location, location.
Condos in ultra popular areas such as Thonglor appreciate much faster, having doubled in price over the past 5 years. As a result, gross rental yields there have dropped to between 5-8%.
Most condos will occasionally require the owner to contribute to a Sinking Fund for repairs and maintenance works.
Monthly condo maintenance fee can range between Thai Baht 30 to 80 per square meter.
Some condo owners provide Cable TV/internet and landline telephone as part of the rental package.
Some condo owners will hire a property agent to manage rental collection and to liaise with the tenant, for an average monthly fee of 10% of the rent.
Within the inner city, expatriates are the primary tenants, specifically Japanese and Westerners.
On the outskirts, more and more young Thais are choosing to rent condos close to train stations so as to save time commuting to work or university.
Foreigners are required to usually pay a lump sum down payment of between 20-30% of the purchase price, upon signing of Sales & Purchase Agreement (SPA).
The balance of 70-80% will be payable upon completion and handover (usually within 16-24 months of signing the SPA).
It is extremely rare for local Thai banks to offer mortgage financing to foreigners. The best option is to apply for offshore financing in Singapore, with UOB Bank or HSBC.
- Transfer tax (2% of government appraised value, buyer usually pays half, seller pays half). By law, all other duties and taxes related to the registration and transfer of ownership must be paid by the developer (in an off the plan sale).
- Stamp Duty (0.5%, seller pays);
- Income withholding tax (1%, seller pays, relates to seller's income); and
- Specific Business Tax (3.3%, seller pays)
Note: Stamp duty is waived if specific business tax is applicable.
A good estimate of tax implications can be derived from Acute Realty's tax calculator:-
- Location is key - your condo will be much easier to rent out and there will be much better potential for capital appreciation.
- Don't over-leverage. If there is a loan on your property, ensure the rental is close to sufficient to cover monthly loan installment.
- Do your due diligence. Ensure you purchase from a reputable, experienced developer. Work with professionals. Hire a lawyer to vet your documents (since these will likely be in the Thai language) and an accountant to handle your annual tax declaration on your rental income.