Located in the heart of Southeast Asia, Thailand has served as a trade and business hub for centuries. It was a buffer zone between colonial powers because of its strategic location. As a result, the country was the only in the region which wasn’t colonized.
Thailand is still able to reap the rewards of its strategic placement on the map today, but in different ways. Its capital of Bangkok is just an hour-long flight from four rapidly growing frontier markets. Namely Vietnam, Cambodia, Laos, and Myanmar.
These nations are among the fastest growing in the world and have given Thailand easy access to cheap labor and almost 200 million consumers – not to mention its own decent-sized population of 67 million.
You’ll find Thai exports in any supermarket in any Southeast Asian country. While stores in Thailand stock themselves with products from Japan and the US, stores in Asia’s frontier markets fill their shelves with Thai exports.
Brands such as Red Bull (which, as a little-known fact, originates in Thailand) are sold globally as well. If you open up your computer and read the label on your hard drive, it’ll probably have a sticker which says “Made in Thailand” on it. This is because Thailand is one of the world’s top makers of hard drives and memory.
Therefore, the Thai economy isn’t just dependent on its neighbors for growth. Not only is Bangkok the most heavily touristed city on the planet (beating out Paris and London in Mastercard’s latest survey), but also one of the world’s largest exporters of automobiles, electronics and hardware.
All of these factors have led to a steady growth in foreign investment which has continued for about 30 years.
Naturally, this extends to the Thai property market. The nation’s middle class, which barely existed a few decades ago, is now much more prominent. They’re capable of buying into the countless new condos and housing projects being built.
Thailand’s capital of Bangkok is the most visited city in the world with over 20 million tourists annually.
Thailand’s housing market is also one of Asia’s most popular for foreign investors. Buyers and renters from all over the world have become part of the real estate market whether they’re working as an expat or are one of the many thousands of foreign retirees living in Thailand.
Like everywhere else, Thailand has its share of problems. A military coup seized power in 2014 and an exact date for elections is still pending. Freedom of speech and freedom of press are not the greatest, to say the least, and its education system lags behind its peers.
But there are also many bright spots. The country is friendly towards foreign investment and almost anyone, even tourists, can open a bank account in less than 20 minutes. Thailand ranked 46th out of 190 different countries in the annual Ease of Doing Business ratings – third place in Southeast Asia behind Singapore and Malaysia.
In addition, the country has a reputation of bouncing back from tough times. There’s even a name for it – “Teflon Thailand”. In the past hundred years, 18 coups happened along with many recessions… but things have still ended up better here than in any of the five neighboring countries, except perhaps Malaysia.
Thailand is undergoing some very severe changes under the current government and with a new king. But if history is any guide, the country will perform well far into the future.
Can Foreigners Invest in Thailand Real Estate?
The business environment in Thailand is not quite as open as some other countries in Southeast Asia. Foreigners may only own up to 49% of a company… unless you’re an American citizen.
Americans can own 100% of a firm under the Thailand-US Amity Treaty, making it one of the few situations where owning a foreign company a US person is actually helpful. With that said, even then the process is bureaucratic and requires approval from multiple government agencies.
On the side of real estate ownership, foreigners can only own – at least easily – a condominium unit above the ground floor in a building where no more than 49% of all units.
Technically, laws permit foreign ownership of land if you’re investing at least 30 million Thai Baht (about US$850,000 as of early 2017), but it needs special approval and there are not many cases known where this has actually happened.
Some people will tell you that you can own land in Thailand under a nominee structure, however unlike in Cambodia, this is illegal and the Thai constitution specifically forbids this. The government has been cracking down on Thai nominee structures in recent years.
Buying and Selling Off Plan
Many condo units are sold by the developer before or during the construction period. Buyers enjoy steep discounts by doing this, and the developer gets easier access to loans along with the ability to say that their project is “selling out”.
It usually takes three to five years for a condo building to finish construction from the time sales first begin. Because of this, there’s a market in buying units off-plan, and selling them at a profit when the building is closer to being finished.
To reserve a unit and sign the contracts, you often only need to make a down payment of 10% – along with another 10% gradually, over the course of a few years, with installments payable monthly. The right to buy and transfer the condo unit once construction is finished can be transferred and sold.
Over a period of several years, property values can appreciate significantly. There have been cases of people buying units off-plan and selling the contracts before completion at above an 100% premium.
But this also has its inherent risks. The worst-case scenario is that you’ll need to abandon the contract, lose your down payment and any other installment payments you’ve made if, for example, property values decline or you don’t have money available to complete the transfer.
How Much are Property Taxes in Thailand?
Condominiums in Thailand have no annual property tax on them. With that said, any condominium will have a management fee for the building’s upkeep, electricity costs, staff and cleaning – it’s not a tax, but is still money which needs to be paid annually for holding the property.
The cost of the management fee depends on the building’s size, density, and standards. But usually it’s around 500 baht per square meter per year.
When transferring property, there’s a 2% fee based on its government appraised value (which should be lower than the price you paid for it). Typically half of this fee is paid by the buyer and half by the seller.
There’s also a stamp duty of 0.5% to be paid when transferring property. Stamp duty is usually paid by the seller.
However, if a property is sold within 5 years of being acquired then a “Specific Business Tax” of 3.3% is instead payable. If a specific business tax is payable, then stamp duty does not need to be paid.
If you choose to rent out your property in Thailand, rental income taxes are extremely low as there are many deductions. Your exact amount of tax payable will depend on your deductions allowed.
More often than not though, it’s not greater than 5% and sometimes far less. If you ask most local landlords, they’ll tell you they don’t calculate or pay the tax and no one ever bothers them.
Is Buying Property in Thailand Safe?
Thailand has rather strong property ownership laws (at least compared to most other places in the region) and a secure, computerized title system. So you shouldn’t have any issues with the government.
If a problem is going to come up at all, it’s going to be from the condo development company or seller.
There’s about two dozen large property developers in Thailand with good reputations and many completed projects under their belts. You should have no major issues with developers of this type – at least not ones which they won’t try and fix.
But you’re in a bit more dangerous territory if you’re dealing with smaller companies. A developer should have at least had a completed project or two built to good standards with satisfied customers.
It’s highly recommended to get a third-party inspector once a unit is built and ready to be transferred to you. It’s rare for a condo unit to be transferred in perfect condition with no problems at all.
A Thai inspector will know what to look for and can add value worth far more than what you’ll pay. If they find defects, the developer will fix them free-of-charge. Almost all condos have a warranty period of at least a year or two which developers must abide by, but they’re often more eager to fix problems if it’s still before the transfer period when money is on the table.
Places to Invest in Thailand
Thailand is a rather large nation of almost 70 million people and as such, there are numerous cities, towns and resort destinations to invest in. Keeping in mind that foreigners may only own condo units, this leaves out smaller towns and villages for property buyers. However, there’s still many options elsewhere.
Bangkok, a city of over 16 million people, is the capital of Thailand and the largest city in Indochina. If anything happens of any business, economic, or political importance, it goes through Bangkok.
Chiang Mai, Thailand’s second largest city, is also not a bad place to buy real estate. But while a lot of foreigners are scooping up condos in resort areas like Pattaya and Phuket, it might be worth avoiding tourist destinations for reasons discussed further below.
The ever-expanding skyline of Bangkok.
For centuries, Bangkok has served as a main entry point for foreign traders and businessmen into Southeast Asia. While the city has obviously changed since the 1700s, its status today as one of Asia’s more important cities is no different.
The city is so large that many of its neighborhoods have their own “sub-markets”, each with their own norms, occupancy rates, prices and outlook. Centrality and access matters a lot, so buying a property in Bangkok’s suburb of Bangna is completely different than buying one in the prime-city center area of Lumpini.
It wouldn’t be practical to cover every single one of Bangkok’s neighborhoods in one post, so only a select few areas will be discussed. With that said, a few general rules exist for buying properties anywhere in Bangkok.
Real estate which is located closer to a BTS Skytrain station will be worth a premium as high as double or triple over a similar property which isn’t. Condominiums located close to the MRT subway line also go for premiums, albeit not as much.
A condo located 100 meters from a mass transit station is unlikely to be sold for less than 200,000 baht per square meter. When a building is located 500 meters away, the premium is reduced by as much as half and vanishes altogether if it’s more than a kilometer away
As Bangkok’s most exclusive area, Lumpini Park and its surrounding streets (Wireless Road, Soi Langsuan, etc.) are also some of the most expensive areas of the city. New property developments on Wireless Road, for example, have been known to reach prices as high as 500,000 baht per square meter.
The reason for these high prices is that Lumpini is incredibly central, yet also rather quiet and leafy. Streets are well-manicured while Lumpini Park – inner Bangkok’s largest green area – adds a sense of calm hard to find elsewhere in the CBD. The many embassies nearby help make the area less dense too.
Lumpini is between several prime areas despite this. Namely, the business districts of Silom and Sathorn, the commercial center of Siam, and the many dining options of Sukhumvit. Needless to say, a BTS station is never hard to find.
Skip the Next Western Recession
Learn the best places to invest – and where to avoid – by downloading our free Investment Cheat Sheet.
Mahanakorn, the tallest building in Thailand, is located in Silom.
The Silom and Sathorn districts are where most of Bangkok’s financial institutions and multinational companies are based. As such, the areas are popular with not only wealthy locals but also expats who are working in Bangkok.
Since this is Bangkok’s central business district, prices are obviously high. But those who live in the area also enjoy easy access to the rest of the city center. A variety of international restaurants and other amenities are always within walking distance.
Sukhumvit is one of the longest roads in the world. It not only extends from Bangkok’s core to its outer suburbs, but eventually goes all the way to the Cambodian border.
However, Sukhumvit is more well-known for its portion which lies in downtown Bangkok. Specifically up to Soi Ekkamai and its BTS station. This strip of road is considered to be the city’s most popular expat area. Countless international restaurants serving everything from Argentinian to Japanese food contribute to its desirability.
Moving southeast along Sukhumvit towards On Nut, the neighborhoods are a lot more “local”. These areas also have many condominium buildings. But they’re often less than half the price of those in the “downtown” part of Sukhumvit.
With that said, suburban Bangkok is now experiencing an oversupply of one-bedroom units. It’s best to buy larger units downtown.
Victory Monument is Bangkok’s transportation hub and center-most point.
Ratchathewi is arguably Bangkok’s most central district. It has three different BTS stations going through it, the airport rail link, and is directly north of the city’s commercial hub.
But despite these things, prices here are also lower than in other core locations. Occupancy rates in Ratchathewi are also some of the city’s highest.
The feel of Ratchathewi is a lot more local and you won’t find as many expats as you would in Sukhumvit or Silom, for example. But the area is near many government offices, some such as the UN which employ foreigners, and is just a stone’s throw from elsewhere in central Bangkok.
Victory Monument and the nearby Soi Rangnam in particular is Ratchathewi’s most desirable residential area. The King Power Complex, Bangkok’s largest duty free mall, is on the street along with many restaurants and stores.
Some foreigners, retirees and second home owners in particular, choose to live on Bangkok’s Chao Phraya River. Scenic views can be had from some condo units along the riverside with boats passing through all day and night.
Generally, the west side of the River has lower prices. This is because of easier access to Bangkok’s central business district (CBD) from the east side. Also, residents on the River’s west must either drive over a crowded bridge or take a boat in order to get to Bangkok’s city center.
Bangkok’s river has malls, branded residences, and some of the city’s soon-to-be tallest buildings being built on it right now. But occupancy rates are low at the moment even without them.
In the meantime, both the public and private sector are rejuvenating the area with countless developments of all types. Time will tell whether they can bring the river back to life.
Chiang Mai is Thailand’s second largest city, but with just around 2 million people living there it’s significantly smaller than Bangkok.
As such, there’s not the same amount of condominium projects (remember: foreigners can only own condos in Thailand) which you would find in Bangkok. Most locals tend to live in houses or other low rise condominiums, unlike in Bangkok.
Nonetheless, Chiang Mai is one of Asia’s most popular small cities for retirees, entrepreneurs, and digital nomads in particular. Even though you’re unlikely to have tenants working for multinational companies.
The property market in Chiang Mai is arguably better for Airbnb and short term rentals than anywhere else in Bangkok. If you’re willing to put some work in and don’t mind being in the accommodation industry, it could prove fruitful here.
Pattaya & Phuket
Our guides usually don’t include destinations we don’t recommend investing in. However, so many foreign buyers choose condominiums in Pattaya and Phuket that it’s worth addressing why not to buy in these two cities – at least not for the purpose of investment.
Many people originally come to Thailand as tourists, visit Pattaya and Phuket (among other places), decide to retire and buy a condo in one of these two cities. While there’s nothing wrong with buying real estate in Thailand because you want to live there, don’t be mistaken: it’s not a great investment.
It’s not that you’ll lose money – although that’s a possibility. It’s that tourist areas, in general, are too subject to “flavor of the month”. Southeast Asia has many beaches, it’s just a matter of where people choose to live.
Pattaya and Phuket have off-seasons, are plagued by low-occupancy rates, and lack the staying power of Bangkok which has multinational companies and a steady flow of well-paid expats.
Again, there’s nothing wrong with buying a place in Phuket or Pattaya if you simply want to live there. But the primary purpose of an investment is to make the most money possible with the least risk.
If a wealthy Thai in Bangkok has a weekend home, it’s most likely in Hua Hin.
With everything said about Pattaya and Phuket above, most of them don’t apply to Hua Hin. You’re probably wondering why.
Hua Hin is a lot less overbuilt than either Pattaya or Phuket. It will probably stay that way due to the nearby Royal Palace. But most importantly, it’s also a lot better fed by local demand.
Take it from someone who got his business degree at Thailand’s top university and speaks Thai: the wealthy locals (there’s more than you might think) love having weekend homes in Hua Hin. But they’re far less likely to vacation in Phuket which is too far away, or Pattaya which is too rambunctious.
Quite simply, if the Chinese and Russians stopped vacationing in Pattaya, its property market would die. Hua Hin has the sustainability and growth which other beachside areas in Thailand do not.
Real Estate Agents in Thailand
Locals don’t really use real estate agents in Thailand. Instead, they either buy from property developers directly or find resale units through mutual friends or online forums.
For the most part, real estate agents in Thailand are a “western service”. They exist to take a commission while making things easier for foreign buyers who don’t speak Thai.
That’s fine if you’re new to the market and truly need help. Just keep in mind that if you’re an investor, you’re immediately losing a few percentage points of profit by using realtors. Use a lawyer – not a realtor – if you need help with the transfer process. Pay him a fixed fee.
If you’re buying directly from a condo developer, there’s no reason to find a realtor or lawyer if the company is reputable (specifically, if it’s listed on the Stock Exchange of Thailand). Remember: it’s their job to sell you a condo unit in a country where realtors don’t exist. So they’ll take care of the transfer process and everything for you.
Thai Visa by Investment
You can get a one-year investment visa, renewable indefinitely, by investing at least 10 million baht in Thai properties. You can also buy stocks, bonds, mutual funds, or a combination of different assets.
In fact, this is something I’ve done myself. I use Bangkok as a base in order to travel to different frontier markets such as Cambodia, Vietnam, and Myanmar. So I have a condominium in Thailand, along with an investment visa.
With that said, it’s not the best program in the region. Malaysia’s MM2H program is less expensive, easier, and comes with more benefits. Meanwhile, you can live in Cambodia indefinitely for around $300 per year.
But I’ve done the program not for investment reasons. I did it because I enjoy Thailand. It serves as a convenient base considering what I do.
Is Thailand Property a Good Investment?
Thailand’s strategic location puts it an hour’s flight from four different frontier markets – Cambodia, Laos, Vietnam and Myanmar. This not only makes it a great base for the region, but allows the Thai economy itself to benefit by “piggybacking” on its less developed, faster-growing neighbors.
Property in Thailand might not have the best prospects in Asia (we believe that title belongs to Cambodia), but the market has nonetheless proven stable over the past decade or so. The Thai Baht has also proven to be one of Asia’s most stable currencies, fluctuating less than even the Singapore Dollar or Japanese Yen over the past decade.
Thailand property (along with its currency and economy) has a low tendency to crash, making it ideal for certain types of investors. Property values held their ground during the 2008 Financial Crisis. Since the coup in 2013, they’ve even doubled in certain areas of downtown Bangkok.
Interesting times lie ahead for Thailand, especially in the political sense. But the nation’s economy has always been able to bounce back and reinvent itself. This has been true even during times much more uncertain than now.
Skip the Next Western Recession
Learn the best places to invest – and where to avoid – by downloading our free Investment Cheat Sheet.
- Why I’m Bullish on Singapore Real Estate - 15/10/2017
- How to Invest in Emerging Markets the Right Way - 12/10/2017
- Investing in Kazakhstan: Asia’s Overlooked Powerhouse - 08/10/2017
- These Cities Have Asia’s Highest Rental Yields - 04/10/2017
- How to Buy and Trade Stocks in Thailand - 01/10/2017
- Taiwan Property: Asia’s Most Overpriced? - 28/09/2017
- Will the Korean Economy Outgrow Japan’s? - 24/09/2017
- Five Fastest Growing Countries in Asia - 21/09/2017
- Investing in Macau: An Overlooked Market in Asia - 17/09/2017
- Too Little, Too Late for Japanese Economy - 14/09/2017